Lord Foulkes of Cumnock

The Right Honourable George Foulkes, having been created Baron Foulkes of Cumnock, of Cumnock in East Ayrshire, for life—Was, in his robes, introduced between the Baroness Ramsay of Cartvale and the Lord Maxton, and made the solemn affirmation.

Lord Hamilton of Epsom

The Right Honourable Sir Archibald Gavin Hamilton, Knight, having been created Baron Hamilton of Epsom, of West Anstey in the County of Devon, for life—Was, in his robes, introduced between the Baroness Thatcher and the Lord Fellowes.

Viscount Montgomery of Alamein: , having received a Writ of Summons in accordance with Standing Order 10(3) (Hereditary Peers; by-elections) following the death of Baroness Strange—took the Oath.

Madagascar: Closure of British Embassy

Lord Watson of Richmond: asked Her Majesty's Government:
	Why they are planning to close the British embassy in Madagascar.

Lord Triesman: My Lords, as my noble friend the former Minister of State for Foreign and Commonwealth Affairs, Baroness Symons, stated on 15 December 2004, we are making changes to our overseas network to reflect changing demands and challenges and the need better to align our resources with our priorities to ensure that the United Kingdom has a cost-effective and flexible network of overseas representation.

Lord Watson of Richmond: My Lords, I thank the Minister for that reply and I declare an interest. As chairman of the English-Speaking Union, I opened the ESU in Madagascar in April 2003. Can the Minister explain why the decision to close our embassy and outsource it to Mauritius, 1,000 miles away, is being taken just as English is becoming the preferred second language of young people on the island of Madagascar and is being taught in all its primary schools? Why is this closure occurring at the precise moment when decisions on very significant investments in the island are about to be taken, when other European countries are opening embassies there, and when the United States millennium fund has just awarded $110 million to Madagascar in recognition of its progress in,
	"governing justly, investing in its people and promoting economic freedom"?

Noble Lords: Oh!

Lord Watson of Richmond: My Lords, in short, why is this penny-pinching Government choosing to close this crucially important representation at a time when, in the same breath, they say that Africa is their top priority?

Lord Triesman: My Lords, in short, the answer is that which I gave initially. We are trying to align the resources available to the demands placed on us. My conversations with people from Madagascar have to be conducted in French. I am extremely glad that the noble Lord has found people who wish to conduct most of their discussions in English. I have not had that good fortune.
	Quite aside from the decision that was taken some time ago—this is not a recent decision—it has not altered the write-off of the debts in Madagascar, which in our case is £27 million, and the UK-led multilateral debt initiative of £1.5 billion of debt relief of which we shall cover approximately 10 per cent. All those arrangements have continued in place. I suspect that they will be of the greatest benefit to the people of Madagascar.

Baroness Trumpington: My Lords, I visited Madagascar some years ago and even then it was vitally important that we kept our embassy open. Am I right in thinking that tourism is increasing there? Although French may be the major language, they do not like the French. I am terribly sorry to say that, but they hate them and they love us. It would be terrible for us to close our embassy there. I entirely agree with the questioner.

Lord Triesman: My Lords, as ever, the noble Baroness is right in her facts and that is perfectly true. I am not talking about who loves the French or not; I am talking about the increases in tourism. I am pleased to say that there have been almost no demands on the consular service alongside that increase in tourism. We believe that it should be possible from Port Louis to deal within two hours with any cases that arise. The logistics and the direct flights should make that possible. No one likes closing an embassy, but we believe that the arrangements are sustainable.

Lord Garel-Jones: My Lords, when the Minister refers to the resources available he is of course referring to the latest expenditure round. Is this not a pattern of closures across the world? Is it not the case that the diplomatic budget is still somewhere around £1 billion per annum; whereas two government departments overspent by that amount last year? Do the Government intend to continue to run a global diplomacy?

Lord Triesman: My Lords, we do. There has been no saving out of some of the realignments that have taken place, including this one. The fact is, as I am sure noble Lords will know, that a number of costs have increased considerably. Post-Istanbul, the security costs of making sure that those who work for us or those who visit our embassies and high commissions are safe have increased considerably. We have boosted our missions in parts of the world that are particularly sensitive—the realignment. Iraq and Baghdad are an example of that.
	There is not an infinite capacity to make such provision. We must make sure that where demand exists we cover it completely. No savings will be made that way; it is realignment.

Lord Forsyth of Drumlean: My Lords, would it not be more sensible to keep open our embassy in Madagascar and to axe the post that the Government have created for the Scottish Executive to have a diplomatic representative in Washington?

Lord Triesman: My Lords, I have never ceased to wonder at the ingenuity with which the noble Lord manages to raise the same proposition. Sadly, of course, he receives the same answer. Devolution has created a number of demands around the United Kingdom to make sure that all parts of the United Kingdom are effectively represented.

Lord Harrison: My Lords, further to points about the importance of the security of embassy staff, what progress has been made in sharing with our European Union and other partners premises that are well secured?

Lord Triesman: My Lords, some progress has certainly been made. I was pleased a couple of weeks ago to have seen a successful embassy on one such shared premise in Dar-es-Salaam in Tanzania. However, even there our European partners and other nations involved in that project are concerned that we should create still greater security and greater stand off, particularly where the consular end of the work is done, because that is often where it is most vulnerable to people coming in from outside.
	All those security issues are extremely sensitive. The overriding principle must be that if it takes some additional money to make sure that people are secure, we provide it.

Baroness Williams of Crosby: My Lords, the Minister is invariably eloquent and sympathetic in his defence of government policy, but will he recognise that there is a conflict here? For example, the embassy in Lesotho, which is one of the poorest countries in Africa, and in the world, is also being closed. There is a stand off between the Government's attitude toward Africa, which many of us on these Benches and elsewhere in the House strongly applaud, and the withdrawal of diplomatic presence in countries that are desperate to have their voices heard. Will he ask the Government to reconsider?

Lord Triesman: My Lords, the decisions on the closures have been taken and I do not want to place any gloss on that in front of the House. More posts are being closed in the Americas than in Africa. Many people will no doubt feel that that is wrong as well. The critical issue is to make sure that the resources we have are pointed in the direction in which they need to be pointed.
	I have a great deal of sympathy—not synthetic but real sympathy—with wanting to make sure that our diplomatic footprint is widely spread. But we must make certain that we meet our priorities. Were we to fail to do that I suspect that there would be a great deal of criticism in the House, and I would share it.

Magistrates' Courts in Mid-Wales

Lord Williams of Elvel: My Lords, I beg to ask leave to ask the Question standing in my name on the Order Paper. In doing so, I declare a modest interest as patron of the Llandrindod Wells Spa Town Trust.
	The Question was as follows:
	To ask Her Majesty's Government whether they have reached a decision on whether to proceed with the public/private partnership financing for the reorganisation of magistrates' courts in Dyfed-Powys.

Baroness Ashton of Upholland: My Lords, the Gwent and Dyfed Powys scheme continues to be within the programme of new court building projects. However, my department must finalise its investment plans following the development of a business strategy for Her Majesty's Court Service. That is due to be announced by the end of summer 2005 and a further announcement will be made thereafter.

Lord Williams of Elvel: My Lords, it is customary to express gratitude to the Minister for an Answer, but my gratitude is limited in this case. This issue has been around for three years: the mid-Wales magistrates' courts are threatened with either closure or rebuilding until some sort of natural arrangement is made. As I understand it, a decision was to be made last year—then it was to be made this year, now it is later on. Could my noble friend the Minister kindly ask her noble and learned friend the Lord Chancellor to whisper in the ear of the Chancellor of the Exchequer to get a move on with this, because people in mid-Wales are worried?

Baroness Ashton of Upholland: My Lords, I am sure that my noble and learned friend will listen very carefully to what my noble friend has said. I understand my noble friend's frustration, and I realise what tremendous work he does in that part of the world, but it is incredibly important that these decisions are made when we have a proper business strategy. So it is not a question of my right honourable friend the Chancellor holding up the discussions or of my noble and learned friend not having put forward the argument. It is a question of ensuring that the strategy is properly in place so that we have an effective strategic plan.

Viscount Tenby: My Lords, I declare an interest as an ex-chairman of a Bench, who has presided over the closure and amalgamation of courts. Would the Minister agree with me that there is greater sensitivity about the closure and amalgamation of such courts in thinly populated areas where local transport is almost non-existent? Would she further agree that inaccessible justice is often justice denied?

Baroness Ashton of Upholland: My Lords, the noble Viscount is right to raise the issue of transport. Indeed, in preparing for this Question that was a point that I raised with officials. We have a policy within Her Majesty's Court Service that public transport links must enable people to travel to court within the guideline travel time of one and a half hours. Indeed, for this particular Question from my noble friend Lord Williams I checked the bus and other travel times. They come in within the hour, which fits very well within the accessibility criteria. I agree wholeheartedly with the noble Viscount that it is important to ensure, as we do in our strategic plan, that transport is taken into account.

Lord Roberts of Conwy: My Lords, can the Minister give any assurance about the time that this process will take after the publication of the strategic approach this summer? Will it be another three years before the plan materialises?

Baroness Ashton of Upholland: My Lords, the ambition is that the strategic plan will be ready in the summer of this year, as I said. There are 10 potential areas where me might look to develop new courts. We have to look very carefully at the timing for those, and I am not in a position at this stage to indicate precisely when it will happen. Having got that agreement, we will be able to indicate to those involved precisely when that will come forward.

Lord Livsey of Talgarth: My Lords, I declare an interest as the former MP for Brecon and Radnorshire. Would the Minister take note of the fact that I received a petition in the House of Lords late last year, which was signed by 3,000 residents, in favour of rebuilding the court in Llandrindod Wells? It is vital that there is access to justice in the county of Radnorshire, which is the most sparsely populated area south of the Highland line. The county of Powys is 132 miles long, and access is extremely difficult. I hope that she and her noble and learned friend will exert some influence to ensure that the PFI goes ahead in this relationship with Llandrindod Wells court.

Baroness Ashton of Upholland: My Lords, I am indeed aware of the involvement of the noble Lord, Lord Livsey, as I have read the correspondence and know that the petition was delivered. I am aware of the issues around Llandrindod Wells. There are real questions about the rebuilding of that court because of the cost involved in the refurbishment. As the noble Lord will know, there are real question marks about whether one could have refurbished the court without great expense—and indeed, whether one could have been compliant with the Disability Discrimination Act 1995, for example, in the process. The noble Lord will also know that there were no queries about the decision from the council involved, and that the council did not appeal. I am very concerned that we ensure that, within the strategic plan, access to justice is provided for all the citizens of that area.

Lord Davies of Coity: My Lords, is there a danger that if the administration of justice is reduced in rural areas, the policing may be reduced? As a result, offences may not result in conviction, giving rise to general insecurity.

Baroness Ashton of Upholland: My Lords, it is very important that we consider issues of general security. I shall not tread into Home Office territory, as my noble friend will not be surprised to hear, but it is important that, when considering access to justice and the facilities people need in their locality, we think about security and individuals' sense of security.
	It is also very important to make sure that our estates are fit for purpose and accessible, and that people are enabled to get into them easily and to understand what is happening within them. It means that we need a good strategic plan for our courts.

Lord Pilkington of Oxenford: My Lords, will the Minister put a little flesh on the bones? What is the problem of racial discrimination in Radnorshire? The Minister said that the problem of the court was racial discrimination, and I would like to know what the problem is in Radnorshire. I spent my honeymoon there!

Baroness Ashton of Upholland: My Lords, I am sure that the noble Lord, Lord Pilkington, had a wonderful honeymoon! I think that the noble Lord misheard me. I was talking about the Disability Discrimination Act and the issue of the accessibility of courtrooms.

Primary Schools: Literacy and Numeracy Hours

Baroness Massey of Darwen: My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I declare an interest as a governor of an inner London primary school.
	The Question was as follows:
	To ask Her Majesty's Government what has been the impact of literacy and numeracy hours in primary schools.

Lord Adonis: My Lords, since 1998 the percentage of 11 year-olds achieving the expected level for their age has increased by 13 percentage points in English and by 15 in mathematics. In his annual report published this February, Her Majesty's Chief Inspector of Schools stated:
	"There have been significant improvements in literacy and numeracy standards since the introduction of the national strategies".

Baroness Massey of Darwen: My Lords, I thank my noble friend for that reply. I see that we have some primary school pupils in the Gallery.

Noble Lords: Order!

Baroness Massey of Darwen: I apologise, my Lords. Apart from academic benefits, could my noble friend comment on other outcomes of the literacy and numeracy hour; for example, the social benefits and group benefits that enable young people to talk with and relate to adults and each other?

Lord Adonis: My Lords, the evidence is that the benefits are positive. Indeed, as we build on the literacy and numeracy strategies in the document Excellence and Enjoyment, published by my right honourable friend the former Secretary of State, we are encouraging primary schools to broaden their range of learning for children, including music, art and languages, building on the success that has been achieved in the basics.

Lord Quirk: My Lords, does the Minister think that phonics teaching should be more consistently observed in schools? Would he also venture a word about adult literacy, not least in Her Majesty's prisons?

Lord Adonis: My Lords, phonics teaching is at the centre of the national literacy strategy and has been since its beginning in 1998. However, we are always anxious to learn from best practice, because our only concern in this matter is that the maximum number of children should learn to read as soon as possible.
	We have asked Mr Jim Rose, a distinguished former deputy chief inspector of schools, to examine the evidence on different methods of teaching phonics in primary schools, including the experience of the Clackmannanshire experiment in Scotland, to see if there are lessons that can be learned. He will report to us at the beginning of next year and we will make any appropriate changes in the literacy framework following that report.
	So far as prisons and adult literacy are concerned, we place great importance on tackling the problems of literacy in prisons and it is a high priority of my department.

Baroness Buscombe: My Lords, given recent reports that the £1 billion campaign to raise literacy standards in primary schools has failed to make a difference to GCSE results, will the Minister agree with my honourable friend in another place, Nick Gibb, and me that we must return to pure synthetic phonics—or, in plain English, the traditional method of reading—in our primary schools? Is there any way that he could speed up the process which he has explained to the House today?

Lord Adonis: My Lords, we wish to see improvements, which is why we have asked Mr Rose to conduct his inquiry. However, we do not accept that there have not been improvements at GCSE and at secondary level. We do not recognise the figures that were quoted in the Sunday Times article this week. In fact, since 1997 there has been a six percentage point improvement in the good pass rates in GCSE English and a 6.9 per cent improvement in mathematics. We see that as building on the success of the literacy and numeracy strategies.
	There has been an even larger improvement in the tests that 14 year-olds now take, where, since 1997, there has been a 14 percentage point improvement in English and a 13 percentage point improvement in mathematics. We are not in any way complacent about the further improvements that are required, which is why we are also looking to reform the curriculum for 14 to 19 year-olds in particular to promote vocational pathways that will further motivate young people and lead in to apprenticeships and other vocational courses. We have made great progress, and we pay tribute to our teachers, who have achieved that increase in results.

Baroness Sharp of Guildford: My Lords, does the Minister agree that the introduction of the literacy and numeracy hours had an immediate one-off effect in raising standards in primary schools, but that—according to the 11 year-old SAT tests—that effect has plateaued in the past few years? Performance has not continued to increase. Is there any reason why we should continue to see it increase in that way?

Lord Adonis: My Lords, I do not agree. The English results went up by three percentage points last year, which was a very welcome improvement.

The Earl of Listowel: My Lords, has the Minister been monitoring the impact of the literacy and numeracy hours on children in local authority care? Have they been benefiting as much as their peers? What proposals does he have to improve outcomes in educational attainment for children in care, perhaps by more use of boarding schools?

Lord Adonis: My Lords, I cannot give the noble Earl the precise figures but will write to him. We have changed admissions procedures for schools to give greater priority to looked-after children to meet those concerns, and we are exploring the issue of whether boarding education can be extended, particularly for the groups that he mentioned.

Lord Renton: My Lords, would it not be a really great burden for very young children under eight years to have to spend 10 hours away from home and to be kept studying?

Lord Adonis: My Lords, I am not sure precisely which children the noble Lord is referring to. Extended days take place only where parents wish to see extended days. We are not requiring any child to remain away from their parents for one moment longer than those parents wish them to be looked after.

Lord Elton: My Lords, the noble Lord, Lord Quirk, drew attention to the importance of reducing illiteracy among prisoners. Is the Minister aware of the increasing body of evidence that backs up the subjectively obvious fact that an increase in literacy in children will eventually reduce the number of prisoners? Will he therefore put as much energy as he can into all methods of increasing literacy among children of all ages?

Lord Adonis: My Lords, I give that assurance. There is no higher priority for the Government than improvements in literacy standards in our schools. That is why we have asked Jim Rose to report to us, to see whether we can make further improvements, including, crucially, improvements in catch-up reading schemes for those who have started to fall behind within the first and second years of starting primary school.

Lord Moser: My Lords, I am impressed by the real improvements that the Government have made with literacy and numeracy in the primary sector, but my impression was that there are still signs of evidence that, in the early years of secondary school, children who have improved in primary school sink back from their achievements, and also that the proportion of children leaving secondary school illiterate and innumerate has not improved greatly in recent years. Is the Minister able to respond to that?

Lord Adonis: My Lords, the noble Lord's impression is correct about the falling-off at the beginning of secondary education, but there has been a significant improvement in GCSE English standards at age 16.

Public Finances

Lord Laidlaw: asked Her Majesty's Government:
	Whether they propose to make any changes in policy following publication of the May public sector borrowing figures.

Lord McKenzie of Luton: My Lords, the Government's existing policies have delivered macro-economic stability and sustainable public finances, and those will continue. Budget 2005 projections show that the Government are meeting their fiscal rules.

Lord Laidlaw: My Lords, I am comforted by the Minister's assurances, but in practice the deficit between taxation revenue and public spending in 2005–06 will be approximately £57 billion, using the Treasury figures. There are only three ways to balance those payments: first, by increasing taxation more than has been predicted; secondly, by reducing public spending by a far greater amount than the Gershon review; and, thirdly, by increasing borrowing more than forecast. Which one of those three methods will the Government use to balance the books in 2005–06?

Lord McKenzie of Luton: My Lords, I do not agree with the starting proposition. The Government set out their projections for the fiscal numbers for revenues which are to be raised for public expenditure through to the end of the current forecast period. Looking at the May figures, there is a great mistake in taking numbers for just a short period and extrapolating the potential impact pf those. However, if you take the May figures, you should also take into account the April figures, where current government expenditure was below the forecast levels.
	I am surprised to be challenged by Conservative Benches on Government debt, where the projected figures in terms of percentage of GDP for the current year are at 35.5 per cent. The series which existed before this Government came into office was at 43.6 per cent, 42.7 per cent and 40.8 per cent. With great respect, I do not believe we have any lessons to learn from Members opposite.

Lord Sheldon: My Lords, the March figures were particularly good, so there is a bit of a downturn in the June figures. However, we should we not take a more relaxed view of this? We do not need to look at them month by month because it is the long term that really counts. The confidence we have in the way that the economy of this country is being run should be the main test. That, I think, is good enough.

Lord McKenzie of Luton: My Lords, I agree with that assessment. We should understand that we are dealing with the net figure of two aggregates when looking at deficits. Those can be somewhat volatile, and then to take just one month's figures and to extrapolate from them can be wholly misleading. Look at this Government's record on forecasting: it has been better that the OECD, better than the IMF, and, as the European Central Bank analysis shows, between 1999 and 2003, our forecasting was the best of all the governments in G7.

Lord Forsyth of Drumlean: My Lords, when will the Government produce honest borrowing figures? The Minister chose to make a comparison with the previous Conservative government. When will we see the end of the Enron-style accounting, where huge sums of borrowing are presented off balance sheet? I am thinking, for example, of the PFI borrowings and of the borrowings which have been made to British Rail, as it was. These sums do no appear. Therefore, if the Minister wishes to make an honest comparison with the previous government, will he produce the figures which people want in order to know the extent to which they have put this generation in hock as a result of borrowings which are off balance sheet?

Lord McKenzie of Luton: My Lords, the Government make an honest assessment. This Government have been more transparent in the way they have dealt with public finances than any previous government. That is a key part of anchoring the fiscal and monetary stability on which this Government's economic policies have been so successful. On the PFI—and I know there has been press comment on this—the ONS press release of 20 May states that,
	"the ONS has taken no decision to change the treatment of PFI schemes in the public finances".
	Some of those PFI schemes are on the balance sheet, quite properly. There is an assessment in each case on where the risk lies, and there has been no change in that approach.

Baroness Noakes: My Lords, the economic cycle over which Golden Rule borrowing is measured is due to end this year. Will the Minister confirm that the Government have no plans either to change the definition of the economic cycle, or how it is measured?

Lord McKenzie of Luton: My Lords, I confirm that the Government have no such plans. The Government's position on measurement of the economic cycle has been in place since 1997, and that process and the parameters have not changed.

Lord Higgins: My Lords, is it the Government's policy to fund their borrowing in full, and if not what do they expect the effect will be on money supply interest rates and inflation?

Lord McKenzie of Luton: My Lords, the Government will fund their requirements in the normal way, taking account of the normal market conditions in full.

Lord Brooke of Sutton Mandeville: My Lords, was it an exercise in transparency when the noble Lord, Lord Warner, recently said that an increase of £30 billion to £90 billion in NHS expenditure was an increase of 300 per cent, or is new Labour arithmetic a variant form?

Lord McKenzie of Luton: My Lords, I would not like to be drawn into that particular statistic. The arithmetic of new Labour has been exemplary, as has its management of this country's economy.

Lord Northbrook: My Lords, is the Minister aware that the Bank of England has recently cut its growth forecast to 2.6 per cent? Does he think its forecasting record better than the Government's?

Lord McKenzie of Luton: My Lords, I reiterate that the Government's projections on growth have been better than those of any other forecasters over the period. The next pre-Budget report will be in November or December, but I stand by the fact that the Government's record has been good and better than that of any independent forecaster.

Companies (Audit, Investigations and Community Enterprise) (Northern Ireland) Order 2005

Baroness Amos: My Lords, I beg to move the Motion standing in my name on the Order Paper.
	Moved, That the draft order be referred to a Grand Committee.—(Baroness Amos.)

Lord Tordoff: My Lords, I hesitate to intervene, but I see that the order is to be referred to a Grand Committee. In that case, it will presumably be possible to table amendments, but it is not possible to table amendments to orders. There is confusion and we ought to sort it out. The Procedure Committee should have yet another look at the matter, because the order is not being referred to a Grand Committee, but to the House sitting in the Moses Room or some other place off the Floor of the House.

Baroness Amos: My Lords, we have discussed the issue before. It is a shorthand way of identifying the location.

Lord Tordoff: My Lords, it may be a shorthand way, but it is wrong.

Baroness Amos: My Lords, I am happy for a committee to take the matter away and look at it again, but it is what has been agreed by the usual channels.

On Question, Motion agreed to.

Charities Bill [HL]

Lord Bassam of Brighton: My Lords, on behalf of my noble friend Lady Scotland of Asthal, I beg to move that the House do now resolve itself into Committee on this Bill.
	Moved, That the House do now resolve itself into Committee.—(Lord Bassam of Brighton.)

On Question, Motion agreed to.
	House in Committee accordingly.
	[The CHAIRMAN OF COMMITTEES in the Chair.]
	Clause 1 agreed to.
	Clause 2 [Meaning of "charitable purpose"]:

Lord Craig of Radley: moved Amendment No. 1:
	Page 2, line 7, at end insert—
	"(za) the advancement of the effectiveness and welfare of the armed forces of the Crown;"

Lord Craig of Radley: In moving Amendment No. 1, I shall speak also to Amendment No. 9, which is grouped with it. I thank the noble Lord, Lord Phillips of Sudbury, for adding his name to my Amendment No. 1.
	The Minister and other noble Lords who participated in the Grand Committee on the earlier Bill will recognise the thrust, if not the precise wording, of my first amendment. Taking advantage of earlier comments from noble Lords on my amendment to the earlier Bill, I have dropped "efficiency", which is used in the excepting SI 1056 of 1965, and used instead,
	"effectiveness and welfare of the armed forces of the Crown".
	I hope that that formulation will appeal to those Members of the Committee who criticised the use of "efficiency". Some said that it was a rather nasty little word; others objected on the grounds that it caused confusion with military efficiency, which is clearly a matter for government to underwrite. The detailed drafting apart, I shall remind the Committee why I think that this addition to the descriptive charitable purposes in Clause 2 is important.
	The Bill is a new beginning for charities. It specifically removes the presumption that currently exists—that bodies advancing religion and education or relieving poverty benefit the public. No mention is made of charitable military connections, although those, like education and religion, owe that status to the 1601 Act. I asked at Second Reading whether the omission was important to, or had a bearing on, the public benefit presumption for Armed Forces funds. I have not yet had a response. My two amendments seek to address this omission.
	As noble Lords are aware, my concern is primarily for the 15,000 or so service non-public funds—SNPFs—which have been grouped as excepted charities. I shall not repeat what I said at Second Reading and in Grand Committee about the spread of activities covered or the value to servicemen and women of these funds. For decades they have had charitable status as advancing the efficiency—now I shall say effectiveness—and welfare of the Armed Forces of the Crown.
	The Minister and other Ministers have told me that these SNPFs will neither lose their charitable status nor their present tax advantages as a result of this new legislation. Ministers have pointed to subsection (4) and to the catch-all subsection (2)(l), which says that everything now recognised as having a charitable purpose will continue to do so. So, they say, SNPFs are covered. However, that is just for the charitable purpose test. What about the public benefit test? Ministers can give no assurance about that. It will be for the Charity Commission, not the Government, to adjudicate on public benefit.
	The Charity Commission's commentary on the description of charitable purposes in the Charities Bill confirms in paragraph 36:
	"The defence of the realm . . . such as . . . promoting the efficiency of the armed and emergency services"
	remain a charitable purpose. Some may argue that that is good enough to safeguard SNPFs. But that is not the same as having it on the face of the Bill. Others, even the Charity Commission, may find it hard to reconcile the broad sweep and intricacies of the public benefit tests for every charitable SNPF. That possibility could arise. Optimistically, I hope that this would not be the case today. But this legislation will stand for years. Views or public perceptions could change.
	Specifically, on Amendment No. 1, why, I ask myself, are the Government so averse to listing any purpose that is so closely tied to the defence of the realm, surely the prime responsibility of any government? The Minister said that the list is designed to include,
	"best established and recognisable charitable purposes, but is short enough to be a memorable list".—[Official Report, 3/2/05; col. GC 36.]
	I do not find that a very convincing case for ignoring the armed services and their contribution to the defence of the realm.
	In summary, my case for my first amendment is that it specifies purposes directly related to the defence of the realm. Because the Bill is a new beginning for recognising charitable status, it is right to include the military charitable purposes. If it is there on the face of the Bill, it will carry forward in legislation the original military concepts of the 1601 Act, from which, given their assurances, Ministers are not attempting to resile. Let them agree this amendment as an earnest to that position, and to help to underwrite the public benefit test that the Charity Commission will set.
	Turning to Amendment No. 9, I have already explained my concern that there is no guarantee in this Bill that SNPFs, which presently enjoy charity status, will continue to do so under the additional concept of a public benefit test. In the round, if it is argued that any of the 15,000 SNPFs, by advancing the efficiency of any of the Armed Forces of the Crown, thereby meet the public benefit test, then I shall, of course, be content.
	Ministers infer that the Charity Commission would invariably agree that there is a public benefit for all SNPFs with an eligible charitable purpose. But reading the Charity Commission's views on public benefit tests, particularly its thinking about the judgments that will be called for on identifying a direct or indirect public benefit—the number of members of a particular trust, and so on—I wondered if it might not be better to avoid a possible difficulty rather than deal with it post-legislation, by statutory instrument. Other amendments are intended to tighten the public benefit test for a whole variety of reasons. The commission itself says that perceptions of public benefit can change over time. At some future date, SNPFs may find that they are caught in the adjustments to the definition of the public benefit test.
	I am taking it as common ground in the Committee that service non-public funds merit passing the public benefit test. Amendment No. 9, which also relies on the agreement of my previous amendment, would achieve that. I beg to move.

Lord Phillips of Sudbury: I support the amendment, to which I have added my name. When we went through the Bill last time round at great length and deliberation, I was marginally inclined against adding a further specific purpose to Clause 2. However, on reflection I was persuaded by the arguments advanced by the noble and gallant Lord and others for these reasons.
	First, the original 1601 preamble on which, somewhat paradoxically, modern charity law is still based, referred to the setting out of soldiers. The support of the military has been a charitable purpose since time immemorial and it seems slightly odd, therefore, that one has a whole series of new charitable heads specifically set out in Clause 2. I think, for example, of animal welfare or the saving of lives and various others—not that I have any objection to them, but it seems somewhat quixotic that they should find a specific place when military charities, which have been at the heart of our charity system for ever, are not mentioned specifically.
	The other point is that the effectiveness and welfare of the Armed Forces of the Crown is a different genus to most other charities; it is a rather particular breed of charity, if I may put it that way. One needs to bear in mind that, in this day and age, the role of the Armed Forces of the Crown is principally the preservation and sustenance of peace—not just in these islands, where there has been too much to do in Northern Ireland, but all over the world, sometimes on their own and sometimes as part of UN peacekeeping forces.
	So, by the end of reconsidering our previous debate, I was sufficiently moved towards the position of the noble and gallant Lord to add my name to his amendment.

Lord Hodgson of Astley Abbotts: I have some sympathy with the amendment moved by the noble and gallant Lord and supported by the noble Lord, Lord Phillips. We went through this in some detail in the previous Committee and I suspect that the Minister's speaking note will tell him that the Government believe that the Armed Forces' charities will always be included for charitable purposes and refer us to Clause 2(2)(l), which mentions,
	"any other purposes within",
	the subsection. If that is his speaking note, it is a rather unheroic response and I am inclined to support the noble and gallant Lord if the Government cannot do better than that, but I look forward to hearing from the Minister.

Lord Renton: I wish strongly to support the amendment. The previous legislation, starting with the 1601 Act, which merely stated purposes but did not enact law, went pretty wide. It is remarkable that it lasted for all those years from 1601 to 1958; if I may say so, I had some responsibility for helping to pilot the 1958 Act. Since then, the legislation has always kept the purpose of charitable donation and establishment in very wide terms. But now we find that there is an attempt to pin it down to the specific purposes mentioned in Clause 2(2), under the heading of "charitable purpose".
	The Government, no doubt trying very hard, have attempted to list all the charitable purposes that could arise. But, as the noble and gallant Lord, Lord Craig of Radley, has pointed out, it does not contain what he has suggested it should contain; namely,
	"the advancement of the effectiveness and welfare of the armed forces of the Crown".
	Therefore I hope that the Government will realise that they have a left a gap which simply must be filled.

Lord Campbell of Alloway: I have not previously taken part in the Bill, but perhaps I may very briefly support these amendments. The issue appears to be whether the provision should be in the Bill or not. Having listened to this debate and to my noble friend Lord Renton, I cannot see any argument or justification why it should not. It is a protection which is worthy of protecting. I cannot see what the objection should be.

Lady Saltoun of Abernethy: It has always been my understanding in legislating that when a list of purposes is given in detail, as we have here, other purposes are, ipso facto, excluded. On that basis, it is extremely important that this particular purpose be included. Therefore I support the amendment of the noble and gallant Lord, Lord Craig of Radley.

Lord Bassam of Brighton: Before I get into the meat of the arguments that have been advanced in support of these two amendments, I ought first to issue a "welcome back" to everybody who has contributed to this Bill over the many hours, days, weeks and months that we considered it very carefully before the election. I am looking forward to conducting our very courteous discussions as we go through the Bill once again.
	I have listened very carefully to what has been said in advance of these two amendments. I must reiterate the views that we set out when we gave this Bill first consideration because there is perhaps a misunderstanding as to the Government's intent.
	I aim to be as clear as I can on the status of charitable service non-public funds—the SNPFs. As the noble and gallant Lord, Lord Craig of Radley, has very carefully explained, these are charitable funds within the Armed Forces whose objects are, broadly speaking, directed to providing for the welfare of serving personnel and their dependants. By doing that, they contribute greatly to the efficiency of the Armed Forces of the Crown and thus to the defence of the realm. I said in Grand Committee on this Bill prior to the election, and I repeat, that promoting the efficiency of the Armed Forces has been a charitable purpose for a very long time; is now a charitable purpose; and under the Bill as drafted will continue to be a charitable purpose. Legally, that is absolutely secure and there is not a shred or scintilla of doubt about it.
	As ever, the noble Lord, Lord Hodgson of Astley Abbotts, correctly anticipated part of our argument. I explain again, for the benefit of Members of the Committee, that, as the noble Lord anticipated, the legal position is achieved by Clause 2(2), which lists the descriptions or headings of charitable purposes. There are 11 specific headings and a twelfth general heading, which is paragraph (l) Clause 2(2). One of the effects of the twelfth, general, heading is to secure the charitable status of everything that is recognised under existing charity law as a charitable purpose but that does not come under any of the preceding 11 specific headings. That answers the point made by the noble Lady, Lady Saltoun.
	It is achieved by Clause 2(4)(a). Needless to say, the Ministry of Defence has been carefully and fully consulted. I can advise Members of the Committee that it fully supports the Charities Bill. The Ministry believes that it is workable for service charities and is not, ultimately, unduly onerous. For that reason it is fully content with the Bill as drafted.
	The Bill abolishes the current presumption of public benefit enjoyed by poverty-relief, religious and educational charities, to put all charities on an equal footing for the first time in having to show public benefit to qualify for charitable status. The noble and gallant Lord's Amendment No. 9, which I will continue to resist, would go against the grain of that by introducing, in effect, a new presumption of public benefit. The new presumption would be for the exclusive enjoyment of charities promoting the effectiveness and welfare of the Armed Forces. The noble and gallant Lord is effectively saying to Members of the Committee and, through your Lordships' House, to all other types of charities, "You have to pass the public benefit test to qualify as a charity, but Armed Forces charities ought to be a special case. They ought to be excused from ever having to pass a public benefit test". I question whether that is right.
	The Government have ensured that the charitable position of service non-public funds is fully and properly protected by the Bill. There is no doubt about that. For those reasons, I invite the noble and gallant Lord to withdraw his amendment.

Lord Campbell of Alloway: The noble Lord—

Lord Bassam of Brighton: Perhaps the noble Lord will let me finish.
	I listened to the force of the argument made by the noble and gallant Lord. I want to reflect a little more on the first of his amendments, but I also wish to make it plain that I will have to continue to resist Amendment No. 9 on grounds of consistency. If he will think further on Amendment No. 1, I am prepared to say that I will give it further consideration and that there could perhaps be discussion on the point. As it is, the Bill is entirely workable and supportable.

Lord Campbell of Alloway: The noble Lord appears to be dealing with this as a matter of construction. His argument is based, apparently, on the advice that he has received from the Ministry of Defence. I assure him that that advice is very often wholly misconceived and totally deficient.

Lord Renton: Before the noble Lord answers—

Lord Campbell of Alloway: I am so sorry.

Lord Renton: Has my noble friend finished?

Lord Campbell of Alloway: No, I have not; but do carry on.

Lord Renton: Before the noble Lord answers my noble friend, would he be so good as to point out which part of Clause 2 covers the first amendment moved by the noble and gallant Lord, Lord Craig of Radley, which states:
	"the advancement of the effectiveness and welfare of the armed forces of the Crown",
	of which there is no mention in Clause 2?

Lord Bassam of Brighton: Perhaps I can deal first with the point raised by the noble Lord, Lord Campbell of Alloway. I am not at the Dispatch Box to question the advice that we are given by the Ministry of Defence. It has had an entirely consistent position all the way through, supporting and aiding our consideration of the Bill.
	I have made it plain—and I think that the noble Lord, Lord Hodgson of Astley Abbots, agrees—that Clause 2 accurately lists the descriptions and headings of charitable purposes. The twelfth heading, paragraph (l), answers the noble Lord's point on service charities.

Baroness Carnegy of Lour: The noble Lord indicated that he thinks that this is fairly a trivial matter.

Lord Bassam of Brighton: I do not think that this is a trivial matter. I can understand fully the seriousness of the points that are being made. I do not believe that it is trivial; it is an important consideration.

Baroness Carnegy of Lour: The noble Lord said that what the noble and gallant Lord wants could happen anyway under Clause 2(2)(l). Looking down the sweeping list of advancements which can be considered "charities", may I suggest that the advancement of peace would be consistent? Why does not the Minister simply include that if he is to continue doggedly defending the Government's position on such a small matter?

Lord Bassam of Brighton: Towards the end of my comments, I said that I thought that there was some scope for further discussion. Although I was not going to say from the Dispatch Box this afternoon that I would positively offer up an amendment, I am prepared for us at least to give some further small consideration to this before Report.

Lord Craig of Radley: I thank the Minister for his response and all Members of the Committee who have supported me in this amendment. From what the Minister said, I take it that he is prepared to give Amendment No. 1 further consideration and, on that basis, I am happy to withdraw it.
	Amendment No. 9 is very much a probing amendment. I recognise that it is perhaps asking for too much, but at the same time I do not believe that we have covered the point that is really at issue: whether the public benefit test is applicable in the round to service non-public funds or has to be applied to every single one. Although at this stage I shall be prepared not to move Amendment No. 9, the position will need to be very much clearer before I am happy.

Amendment, by leave, withdrawn.

Lord Wedderburn of Charlton: moved Amendment No. 2:
	Page 2, line 10, at end insert "or belief"

Lord Wedderburn of Charlton: In moving Amendment No. 2, I should like to speak also to Amendments Nos 4 and 5 which are grouped with it. I say at once that I regretted that the suggestion made by the committee that considered the draft Bill—that the question of charitable purpose should be divorced from the financial issue of tax exemption—was not accepted by the Government. However, as that is the case—and obviously will not change—there is no escape from issues of social policy in the first part of the charity law debate.
	Our amendment pursues the question of policy which would make one paragraph of the list that has been referred to—the descriptions of charitable purposes—read, "for the advancement of religion or belief". There are three main headings to that argument. First, it was argued on the previous Bill—I need not repeat it—that the Bill as it stands, which refers to "the advancement of religion" fullstop, arguably does not comply with Articles 9 and 14 of the European Convention on Human Rights on the right to manifest one's religion or belief and to have that right secured without discrimination. Amendment No. 5 offers the Government a second thought on the question of cross-reference to the European Convention.
	Of course, it is true that our law has in many areas come to regard freedom of religion and freedom of non-religious belief on a par. In the recent Communications Bill, the recent employment regulations and, above all, in the Equality Bill, which is going through your Lordships' House at the same time as this Bill, a key concept is that there should be a ban on,
	"discrimination on grounds of religion or belief"—
	those words being explained as including lack of religion or lack of belief. In our submission, it is quite impossible that those words, which no doubt have a meaning, should not have the same meaning in this Bill—not by reading across from Bill to Bill, but because the object of there being no discrimination in regard to religion and belief, as the Long Title of the Equality Bill states, is the same as the object being discussed in this amendment.
	The gap in the new Charities Bill is in leaving the advancement of religion not to be balanced by the advancement of non-religious belief. Of course I understand, as I am sure my noble friend will say, that the list in Clause 2(2)(a) to (k), which has been referred to in previous debates, does not exclude things that are analogous, as we shall come to.
	There is new doubt in the Bill which is relevant to the argument on Amendment No. 2. Earlier this year on 20 January, in debating the old Bill, my noble friend Lord Bassam set out the common law notion of religion, as opposed to non-religion, in a formula which was acceptable to the commission, the Government and, indeed, the courts (Hansard col. 963). I have sworn not to cite many court cases at this stage of the new Bill, but I shall refer to one, that of the South Place Ethical Society in 1980. Mr Justice Vaisey used precisely the same words as my noble friend did when he said:
	"To qualify as a religion under charity law, there has to be a belief in a supreme being and acts of worship of it".
	My noble friend cannot advance that argument now under the new Bill, which has very many differences from the old Bill. The old definition is no longer applicable because a new clause or a new paragraph of Clause 2 in this Bill expressly includes within "religion" a religion that does not involve belief in a god—one that does not have a supreme being. So that when it is said—and this is the second heading of our argument—that "belief" is a vague term, that is now matched in the new Bill by the term "religion", which receives no definition. To say that something is included adds to one's knowledge, but in this case it makes for more doubt about what "religion" can include.
	The same terms "religion" or "belief" are not only used with the same meaning in the Equality Bill; there is even a clause in the Equality Bill which expressly protects charities which benefit persons of a particular religion or belief. The parallel is quite clear.
	In the new Charities Bill, non-religious belief is still excluded from mention in the list of descriptions—I say "descriptions" advisedly—that get you halfway to the automatic tax-exempt status. That exclusion is in itself a material discrimination. The treatment is not even separate and equal.
	It has also been argued that the term "belief" is unacceptable because some beliefs might be evil, irrational and offensive. Again, that argument belongs not to the test of charitable purpose but to the question which is now the second hurdle in proving you are a charitable purpose—that of public benefit. Public benefit must now be proved, and we ask for no privilege from that. But offensive purposes would not normally be for the public benefit.
	Another objection has been that "belief" might include political beliefs. The Charities Commission has helped enormously in its paper RR12. It recently told charities promoting human rights that charities may properly adopt campaigning—it lists a number of things which are, broadly speaking, political methods—so long as these do not become "dominant". That perhaps is sufficient to exclude the argument on political beliefs, but Amendment No. 6 was meant to adopt that formula. However, because the amendment is defective in the form in which it appears, for which I am responsible, I shall not speak to it today.
	More importantly, the Government have hitherto argued that all those arguments, even if they are wrong, are irrelevant, because an association to promote non-religious belief will always be charitable in practice under Clause 2(4), which was mentioned earlier. That is the so-called rag-bag clause, which validates any purpose
	"regarded as analogous to, or within the spirit of"
	an explicit purpose in Clause 2(2)(a) to (k).
	If a fund is expressly stated to be not for the purpose of promoting religious beliefs, but for the promotion of secular beliefs, which are not "within the spirit of" or "analogous to" religion, it is manifestly impossible for the commission, the court or anybody else to declare that it is. One has to look for something else to which it can be analogous.
	Whether it is analogous to something else in the list (a) to (k) depends on the facts. In the 1980 case of the South Place Ethical Society, it was found that further purposes were analogous to education.
	This is the kernel of the case. If such a purpose for the promotion of non-religious belief is always at risk of being found not to be analogous to any express description in the list, it will not be for "charitable purpose". That is a risk that "religious purposes", however they are defined, do not run. Those purposes proceed automatically across the first hurdle on to the second test of public benefit.
	The balance of risk is manifestly unequal between religious and non-religious purposes. Our amendments invite the Government to remove that discrimination from the Bill.

Lord Phillips of Sudbury: I thank the noble Lord for giving way, as I am trying to help the debate, which is a difficult one. I wonder whether he has taken full account of the fact that there is a well-established branch of charity law, under what is called the fourth head, which is equivalent to Clause 2(2)(l), which is the promotion of moral or spiritual welfare, or the improvement of the community. There are many cases that validate that as an independent, stand-alone head of charity. Does the noble Lord not think that there is a secure basis on which philosophies of belief or ethics that are not traditionally religious can found and retain with confidence their charitable status?

Lord Wedderburn of Charlton: I am grateful to the noble Lord as two points arise immediately from his argument. I was about to sit down, but I shall answer them now.
	First, the noble Lord begins with the proposition that a charitable purpose or the purpose in a fund, document or association that is not for religious belief explicitly, and which is not within his moral improvement formula, must prove in some other way that it is analogous. That may be very difficult to do. The noble Lord has put a limit on the analogy to suit his argument, finding it in the original deed.
	It follows that there is an extra risk for the advancement of non-religious belief. It is that extra risk that creates discrimination. It is impossible not to see that there is something extra—a hoop that the purpose must go through—than what is expressly stated in the list. I beg to move.

The Earl of Onslow: When the noble Lord referred to a supreme being, was he implying that charity law applies only to religions that are monotheistic, or does it include Hinduism, which obviously is not? Does it exclude the present law of something like the National Secular Society? Perhaps he could tell me that for my education and possibly that of other Members of the Committee.

Lord Swinfen: I intervene on this amendment, although it might have been better had I intervened on Amendment No. 3 instead because I received a letter two days ago from a Mr Pravin Shah who is a Jain. I gather that he wrote to the noble Lord, Lord Bassam of Brighton, on the same day. It would be useful if the noble Lord's answer were recorded in Hansard for the benefit of all.
	Mr Pravin Shah wrote to me that he was,
	"particularly concerned to see that there is no discrimination against Jains and other religions which are similar to Jainism, but less well known in this country. I note that the new Charities Bill, while stating that one can have a religion that does not involve a belief in a god, does not actually contain any definition of religion or explain what criteria the Charity Commission are going to use in deciding whether something is a religion or not".
	He says that he is deeply worried about that.
	In his letter to the noble Lord, Lord Bassam, which he was kind enough to copy to me, Mr Pravin Shah says that he is pleased that the Bill includes a belief in more than one God. He continues:
	"I was naturally therefore very pleased to see that the government have now put into the new charities Bill a provision that says that a religion does not have to involve a belief in a god. However I was surprised that there was no definition of a religion".
	He goes on to say:
	"I would be grateful if you would kindly let been know how it is intended that the Charity Commission will now decide if something is or is not a religion?
	"Is Jainism to be considered to be a religion after the passing of this Bill? What will happen to religions which are similar to Jainism, but are perhaps less well known in this country? What criteria will the Charity Commission apply?"
	I would also like to know the answer to those questions. I have intervened at an early stage so that, if the Minister needs advice, he has time to get it.
	I know next to nothing about Jainism except that the very strict Jains wear masks over their noses and mouths in case they should accidentally breathe in a living organism. Very often, the strict ones sweep the path in front of them so that they do not accidentally kill anything.
	There is also the question of animism. I do not know whether anyone in this country at the moment practices animism, but it is practised in some parts of the world, in many different forms. Perhaps when he winds up at the end of this short debate, the Minister will be able to answer the questions posed to him and to me by Mr Pravin Shah and also my points on animism.

Lord Borrie: I put my name down to this amendment to add my support. As we all know—or at any rate, as those who took part in the Grand Committee on the Bill before the election will know—the Government have since then sought to broaden the meaning of the vital phrase "the advancement of religion" in the Bill by stating in the present drafting, which is different from before, that religion includes:
	"(i) a religion which involves belief in more than one god, and
	"(ii) a religion which does not involve belief in god".
	I welcome that to some extent, but I do not welcome the fact that the only belief that is specifically recognised is religious belief. The word "belief" appears twice in the amended version, but only in the context of the word "religion". That is clear to all of us.
	What is created for the advancement of non-religious systems, philosophies of belief or ethics should also be recognised as charitable, provided that they are for the public benefit, because one must establish those two points.
	I particularly wish to mention the reference in Amendment No. 4 to the Equality Act 2005—which is a Bill at present, but we anticipate that it will be passed. It is provided because Part 2 of the Equality Bill forbids discrimination on the grounds of religion or belief.
	Clause 45 of the Equality Bill very simply defines "religion" as "any religion". It goes on to define the word "belief" as,
	"any religious or philosophical belief",
	and adds,
	"a reference to belief includes a reference to lack of belief".
	I favour the great simplicity of those phrases in the Equality Bill. It seems to me to be very odd, in two Bills that are likely to be passed in the same parliamentary Session, that one expressly recognises "belief" only if it is a religious belief and the other expressly recognises the significance of both religious and non-religious beliefs. I could refer to Article 9 of the European Convention on Human Rights but my noble friend Lord Wedderburn has already done so. I could also refer to the employment regulations 2003 in which religion or belief means,
	"any religious belief or similar philosophical belief".
	It may be said, and I believe has already been said by the noble Lord, Lord Phillips of Sudbury, in his intervention—I hope he will speak further—that indirectly this Charities Bill recognises as charitable a body set up to advance non-religious beliefs by virtue of Clause 2(4)(a). That refers to current case law. As I understand it, current case law allows as charitable those bodies that are set up to improve the mental or moral welfare of the community, which is pretty broad. It is said that the Charity Commission must follow existing case law, but that can be so only because since the nineteenth century—let alone more recently—the courts have been imaginative under the residuary head of charity described by Lord Macnaghten in the leading case of Pemsel in 1891 as,
	"other purposes beneficial to the community".
	Clause 2 of the Bill—this was also in the version of the Bill that we had before the general election—no longer prescribes the three well known specific purposes of charity that have been with us since the seventeenth century; namely, the relief of poverty, the advancement of religion and the advancement of education, and then a general clause. As Members of the Committee can see from Clause 2, we now have another eight specific heads of charity added on to those three. I shall not read them out as they are in the Bill.
	My point is, as no doubt the Committee will have anticipated, why not expand slightly the head of charity "the advancement of religion" by adding the words "or belief" or have a separate specific head similar to that which my noble friend Lady Turner of Camden wants to discuss under an amendment soon to be moved? If we had a slight expansion of the head of the advancement of religion to cover belief more generally as proposed in this amendment, the amendment would be very simple. It would help many of those who may be puzzled when they look at this Act, as it will be shortly, and wonder what is allowed as charitable and what is not. In years to come that would assist the endeavours of many bodies.

Baroness Whitaker: I have a couple of points to make on the amendment which I support for all the reasons so eloquently deployed by my noble friends. That is because it seems to me that the law is not only, and perhaps not even primarily, for lawyers; it is for the citizens who intend to abide by it. Ordinary people, like me, do not understand that non-religion is included in the term "religion". It flies against sense. However, I am comforted by the fact that the Government share that view in numerous other pieces of legislation. I believe that we need joined-up government here.
	We should use the language of the European Convention on Human Rights. We should say "religion or belief". I am also comforted by the opinion of the Joint Committee on Human Rights, which stated:
	"We remain of the view that protection of Article 9 rights on an equal basis could most effectively and clearly be ensured by provision on the face of the Bill, expressly extending clause 2(2)(c) to cover all religious and non-religious organisations which promote systems of belief".
	Finally, there is a question of parity: non-religion should be on a par with religion. It will not be so unless we adopt the internationally-recognised language of "religion or belief".

Lord Phillips of Sudbury: I am sympathetic to what I take to be the general thrust of argument of those in whose names the amendment stands. I would have supported it if the Bill had not contained the introduction of the public benefit test, which in future has to apply to all charities. Until it comes into force I concede that there is a discriminatory difference between religious charities and organisations such as the South Place Ethical Society mentioned by the noble Lord, Lord Wedderburn, which is not a religion in any conventional sense but is a body committed to the promotion of ethical principles.
	As I said, at present there is discrimination against that sort of body because it has to prove public benefit, whereas religions of whatever sort—they are now extremely wide in the definition—do not. We are dealing with a Bill that is going to level that playing field. I am left wondering what advantage there is in the amendments. I agree with the noble Baroness, Lady Whitaker, that the Bill must be for laypeople and citizens, not for lawyers.
	Ironically, as both a citizen and a lawyer—and indeed a charity lawyer—I think that the amendments will make life more rather than less confusing. As I said, there is a general public sense of what is and what is not a religion. If we asked 100 men and women in the street about an organisation such as the South Place Ethical Society, whose objects are "the study and dissemination of ethical principles and the cultivation of a rational religious sentiment". I doubt that most people would view it as a religion. So to try and equate it with that is more confusing than clarifying.

Lord Borrie: The South Place Ethical Society was able to convince the court that it was charitable, not because it was a religion but because it advanced education. Because it happened to be able to do that it was charitable. Other societies for the promotion of beliefs in ethical conduct and so on may not have any educational role but they are there to advance a belief in good ethical conduct on a non-religious basis. Do they not appear to be excluded by the wording of the present Bill?

Lord Phillips of Sudbury: The noble Lord carried forward the argument that I was on the point of making: that the South Place Ethical Society was given charitable status, as he correctly says, not because it advances education but because by analogy—it reels off the cases: Re Price, Re Hood, Re Scowcroft; well known cases in this field—it was charitable under the fourth head as promoting the moral and spiritual welfare or improvement of the community.
	It does not matter one whit whether one obtains charitable status on that basis or if it is a conventional religion under the religious heading. There is no difference. There is no extra hurdle to be leaped in getting charitable status on that basis. That is why I believe that the Bill moves the whole thing on and why I do not believe that the amendments will help at all.
	Finally, many Members are aware of the Scientology case. After a particularly difficult application to the commission, the commission produced an extremely long and, I believe, well reasoned judgment, which was getting on for some 50 pages, in the course of which it said that,
	"the Commission has regarded the concept of moral or spiritual welfare or improvement as a flexible basis upon which a wide range of purposes beneficial to the public may by analogy be recognised as charitable, particularly where it was apparent that the benefit flowing from the organisations' purposes and activities is readily and easily accessible to the public".
	The noble Lord, Lord Borrie, will recollect the case of Public Concern at Work, in which he was involved as chairman of the trustees and I as the solicitor. Eventually we got registration on the basis of the flexible head.
	As I say, I would have taken a different view but for the public benefit introduction in the Bill. But given that it is coming, there is a solid, well established, broad-based and flexible ground on which all the organisations engaged in ethical issues—rationality and the rest of it—can find their charitable status.

The Earl of Onslow: My Lords, can the noble Lord educate me? He says that in the Bill, religion is promotable whether it has a public benefit purpose or not. Does that not lead us to the case of West African witchcraft, which is a religion of some sort and which is in my book morally reprehensible because it involves chopping people up? Are we allowing that sort of thing to have charitable status and consequential tax benefit, because there is no public benefit issue?

Lord Phillips of Sudbury: My Lords, I thank the noble Earl for his intervention. The point that I was making was that in future that sort of charity will not be a charity because it will not be able to satisfy the public benefit test, which in future will apply to religions just like everything else. I believe that that makes my point.

Lord Bassam of Brighton: My Lords, I believed that this would be a lengthy discussion and I was not disappointed. I have listened very carefully to what my noble friend Lord Wedderburn and supporters of his amendments have said, and to other contributions during the course of the debate. It is important, not least because of that, that I explain as fully as I can the Government's position and thinking on this point.
	First, non-religious belief systems which promote moral and spiritual welfare have been for some time, are now, and will continue under the Bill to be charitable. That is secured beyond doubt by subsections 2(l) and 4(a) of Clause 2. It is just worth reminding ourselves of the importance of the Southplace Ethical Society registration. It is more than some 40 years ago—or certainly 20 years—since the British Humanist Association was registered similarly. Since then, a number of other charities promoting humanist, rationalist and ethical and other non-religious belief systems have been registered.
	Secondly, the Government do not accept that the Bill has any discriminatory effects between charities promoting religious or non-religious belief. The noble Lord, Lord Phillips, addressed that issue very well, with his usual forensic understanding of charity law and the intent behind this Bill. Again, this is something that we have looked at very carefully. If there were any discrimination we should have had an obligation under the European Convention on Human Rights to remove it, because the convention does not allow discrimination between religious and non-religious beliefs. In fact, an important effect of this part of the Bill is to level the playing field between religious and non-religious belief, as the noble Lord, Lord Phillips, said.
	At the moment, religious organisations enjoy the presumption that they are for the public benefit, while all other organisations promoting non-religious beliefs do not. The Bill simply removes that presumption. This will mean that, after the Bill is enacted, religious beliefs and non-religious beliefs will be in exactly the same position of having to demonstrate public benefit in order to qualify for charitable status.
	Thirdly, several Members of the Committee, including my noble friends Lord Borrie and Lord Wedderburn, have pointed to the Equality Bill, in which the Government have specifically mentioned non-religious belief alongside religious belief. It has been suggested that it is inconsistent of the Government to argue that non-religious belief need not have a specific reference in the Charities Bill while conceding that it needs a specific reference in other legislation. However, there is a good and, we believe, simple reason why a charge of inconsistency will not stick. It is that, without a specific reference in the Equality Bill, non-religious belief would be excluded from the scope of that legislation. In the Charities Bill, non-religious belief is present in the list of charitable purposes by virtue of subsections (2)(l) and (4)(a) of Clause 2. Those subsections bring in, from the underlying common law, everything which has already been recognised as charitable but which does not come under any of the other headings listed in Clause 2(2).
	The noble Lord, Lord Wedderburn, described it as a "catch-all ragbag", as if to suggest that it is somehow a second-class method of inclusion. We do not see it that way at all. They are not; and there is no sense in which the law gives belief systems any lesser treatment than any other charitable purpose.
	The purposes covered by subsection (2)(l) are many and varied. The Charity Commission's commentary on the description of purposes in the Bill gives 15 examples, including not only moral and spiritual welfare, under which non-religious beliefs qualify, but also defence of the realm; preservation of public order; relief of unemployment; rehabilitation of ex-offenders; promotion of industry and commerce; promotion of agriculture, and so on. Those are all very important areas of charitable endeavour today. But we cannot give everything that is charitable its own specific heading without making the list ummanageably long. Even if we had a very long list, we would still have to have a final category consisting of purposes which had not been specifically mentioned—to avoid the risk of removing, by default, charitable status from any other recognised purpose which was not mentioned in our long list.
	No one, to my knowledge, has argued as a matter of principle that we should try to have a comprehensive list so that we did not need that final category. Once you have accepted that we should not go down the comprehensive route, either you must also accept that some existing charitable purposes will have to be placed together under a heading consisting of all the purposes not specifically mentioned, as the Government have done, or you must accept the risk that some current purposes might, by default, be excluded.
	The Government do not want to run that risk. Nevertheless I entirely understand the very human tendency to want to see the forms of endeavour which are closest to your own heart given prominence, even if, as here, they would have only a symbolic prominence and would have no legal or practical effect at all.
	Fourthly, by including the word "belief" in the list in the terms proposed by my noble friend's amendment, we would bring in all sorts of beliefs—from, I would argue, the frivolous to the bizarre—that should have no place in charity. I am sure that many of these beliefs are sincerely held, and I do not propose to disparage anyone's sincerely held belief by naming any of them. I have heard the argument that it is safe to allow all belief systems or philosophies into the list, because those which really had no place in charity would be excluded from it by the public benefit test.
	If that argument held water, we should be going for a definition of charity that did not have a list of headings of charitable purposes but simply said that anything that was for the public benefit was charitable. The great drawback of that approach is that it produces legislation that gives no clue as to the sorts of endeavour that are charitable purposes. For that reason, it was rejected both by the Strategy Unit in 2002 and by the Government since then. There has not at any stage been an appetite shown for it in any of the consultations that have taken place on the subject; nor has anyone, including the Government, yet been able to formulate a definition of "belief" that would achieve what we wanted—by including those that should be included and excluding those that should not.
	I hope that what I have said has persuaded Members of the Committee that we have thought about the issue seriously. I conclude by repeating that the Bill as currently drafted provides every possible assurance and safeguard that it will remain a charitable purpose to promote moral and spiritual welfare through non-religious belief.
	I come to the points that were raised by the noble Lord, Lord Swinfen. I have received a letter from Mr Shah on Jainism. We wrote at least once to Mr Shah some months ago confirming in terms that Jainism qualifies as a religion under charity law. That holds good under the Bill as now drafted. Clearly, we shall have to respond in similar terms, perhaps with some lengthier explanation, to Mr Shah following his latest correspondence. Of course, I shall share a copy of that response with the noble Lord, Lord Swinfen, and place a copy in the Library of the House.
	The noble Lord, Lord Swinfen, also raised the question of Animism. As we see it, Animism could qualify as a charity if it is for the moral and spiritual welfare of humankind. Obviously, it needs to pass the public benefit test. No analogy with religion is needed for non-religious beliefs to be charitable, as I carefully explained. That is because they may already be recognised as charitable, and continue to be charitable, under Clause 2(4)(a).

The Earl of Onslow: Can the noble Lord possibly explain what the public benefit of Animism is?

Lord Bassam of Brighton: It is not for me to make that argument. It is for Animists to do that.

The Earl of Onslow: The noble Lord did say that it could qualify. I am not trying to catch anyone out or be difficult; I am genuinely seeking after knowledge. It is an interesting debate, so will the Minister please help us? Other religions must now prove the public benefit test which, to my slightly quizzical mind, would fail at all counts before they got to the starting gate.

Lord Bassam of Brighton: That may well be the case, but I am not going to make that judgment this afternoon.

Lord Wedderburn of Charlton: I am grateful to all noble Lords who have contributed to the debate. What my noble friend Lord Bassam has said must be studied carefully. I shall make two final points. The Minister said that we cannot have a long list, or a longer list. We are suggesting only a word; we are not suggesting a longer list. Our suggestion is for this Bill to be alongside other Bills where the word "belief" apparently is acceptable and not too long; the Equality Bill has been specially stressed.
	In regard to that and to what the noble Lord, Lord Phillips, said, which I understand well, it is no answer to a suggestion that there is discrimination by omission on a charitable purpose list of descriptions. That is to say, "Well, everyone is equal on public benefit". If everyone is equal on public benefit, there is no discrimination at all. The discrimination inheres in the omission of a word that is acceptable everywhere else except in charity law. That is a prima facie case that has not been answered. The noble Lord wishes to intervene.

Lord Phillips of Sudbury: I am grateful to the noble Lord for giving way. The point surely is that which was made by the noble Lord, Lord Bassam—either you have the list that we have—which is 12 items long—or you go for a long list because there are lots of headings, of which he has mentioned one, that are not there expressly but are there by analogy. That is the important point; that they are there, whether expressly or by analogy, and you certainly are there by analogy.

Lord Wedderburn of Charlton: I do not want a longer list; I have not asked for a longer list. I am asking for a level playing field—I almost said a level praying field. It is a fact that discrimination can be committed by omission; there are hundreds of examples. It is also a fact, if I may just address the point—I am sure the noble Lord, Lord Phillips, will agree—that Mr Justice Vaisey did find an analogy with education in the case of the South Place Ethical Society, as well as the other phrases that he used about moral improvement, which was analogous to the advancement of education. I do not have the judgment with me. If you have a fund or association which is explicitly not analogous to the list, then an extra barrier has been raised against you from a religious fund or association, because religion is expressly there and you are not. You have to rely on something extra, and that is an extra buffer which amounts to a discriminatory test.
	I almost feel invited to go to the authorities that we discussed in Grand Committee on the earlier Bill, but I will not do so. However, that proposition is the kernel of the case. We will have to look carefully at what the noble Lord, Lord Bassam of Brighton, said to see whether the matter is closed. I have seen copies of the correspondence about Jainism and so on. I understand the point that is being made, but it is being made to the Government, not to my amendment. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Turner of Camden: moved Amendment No. 3:
	Page 2, line 10, at end insert "or other systems or philosophies of belief or ethics which are not included in subsection (3)(a)"

Baroness Turner of Camden: My Lords, I support the amendments being made in this Bill to rationalise the law on charities and to define specific categories of charitable purpose to be covered by it. I have listened carefully to the preceding argument and, as we know, among the purposes listed is the "advancement of religion". Frankly, I still want to put this amendment before the Committee because it seems to me that, once again in this Bill, religions are sorted out as presumably deserving while non-religious bodies are not.
	Here I must state my own interests. I am a vice-president of the Humanist Association and an honorary associate of the National Secular Society, formed as long ago as 1866 by Charles Bradlaugh MP—a well-known free thinker of his time. Most secularists adhere to a system of ethical beliefs. We believe that this life is the only one of which we have any knowledge and that human effort should be directed to improving it for humankind. We believe that morality is social in origin and application. Secularism aims at promoting the happiness and well-being of our fellow citizens. We also believe in the abolition of special privileges granted to religious organisations.
	We accept that there may be some difficulty in arriving at a suitable form of wording. That is apparent from the discussion we have had this afternoon. It is difficult to define precisely what is meant by "religion", and we have sought to come to terms with that argument. Our amendment seeks to spell out that,
	"other systems or philosophies of belief or ethics which are not included in subsection (3)(a)",
	should be covered by this section. Subsection (3)(a), as we have heard, says that,
	"'religion' includes—
	(i) a religion which involves belief in more than one god, and
	(ii) a religion which does involve belief in a god".
	This attempts to define secularism in a more precise way.
	In our amendment, we have sought to come to terms with the argument that we could be opening the door to frivolous or unworthy beliefs. Our concern is that without some amendment to the list of charitable purposes set out in Clause 2, we shall once again be in the position where theistic religions have a respected and acknowledged place in the scheme of things, but secularists and humanists do not.
	Nor is it acceptable in my view to refer to previous case law as an indication that the secularist case is covered. In some of the cases already quoted in the debate this afternoon, the circumstances were entirely different—a different environment, and different circumstances existed, circumstances in which religion was differently considered and always held to have an educational purpose. This is a new Charities Bill, and the position of secular organisations such as the NSS should be respected and acknowledged. I beg to move.

Lord Bassam of Brighton: We covered the ground introduced through the amendment thoroughly in the previous debate. Those arguments hold good for this amendment, as they did for the earlier one. I do not accept that secularism, as opposed to theistic beliefs, has second-class status in terms of this piece of legislation. We see them very much on an equal footing. I argued that case earlier and was supported very ably, as ever, by the noble Lord, Lord Phillips. In some respects, the Bill is groundbreaking and helps to create the level playing field.
	On a personal level, I obviously have some sympathy with what the noble Baroness has to say. Clearly we do not want any form of discrimination in the way in which beliefs or non-beliefs are treated, but we have to ensure that we properly protect the charitable legal structure from applications by the frivolous and the bizarre. I am sure that she fully supports that; she made reference to it. The way in which we have organised and framed the legislation fully covers what she is arguing for.

Lord Wedderburn of Charlton: A question was raised in the previous debate that is touched on in this one. I support my noble friend Lady Turner on clarity in the Bill. However, when the old Bill was with us, my noble friend on the Front Bench offered a definition of religion, as I said in my speech. Is he not now offering the same definition in view of the new features of the new Bill?

Lord Bassam of Brighton: That is right; I offered a definition of religion, which holds good for this Bill as well.

Baroness Turner of Camden: I thank my noble friend for that explanation. As he rightly says, the ground was covered substantially in the previous debate. Of course, we will look carefully at what he has to say when it appears in Hansard but, in the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendments Nos. 4 to 6 not moved.]

Lord Bassam of Brighton: moved Amendment No. 7:
	Page 3, line 3, at end insert—
	"(5A) Any reference in any enactment or document (in whatever terms)—
	(a) to charitable purposes, or
	(b) to institutions having purposes that are charitable under charity law,
	is to be construed in accordance with subsection (1).
	(5B) Subsection (5A)—
	(a) applies whether the enactment or document was passed or made before or after the passing of this Act, but
	(b) does not apply where the context otherwise requires."

Lord Bassam of Brighton: In moving Amendment No. 7, I shall speak also to Amendment No. 86. The amendments are intended to make it absolutely clear that references to charitable purposes, or to institutions with charitable purposes in any enactments and documents, are to be taken as having the meaning given by the Bill in Clause 2(1). The amendments are belt and braces measures, and do not change the law.
	An example of where the amendments would be helpful in interpretation is where a charity's trust deed states that the objects of the charity are,
	"any charitable purpose in England and Wales".
	The amendments make it clear that the charity can carry out anything charitable under the Bill. I beg to move.

Lord Hodgson of Astley Abbotts: I seek knowledge from the Minister. In the previous Committee, we discussed some issues put to us by Christopher McColl QC, an expert in charity law. He had been concerned about whether the Bill would have proper effect on charities established before it was passed. Do the amendments address that point, which was technical and difficult, or are we in a different area addressing a different issue? Reading it, it seems that there are Christopher McColl-type points. I would welcome his opinion as to whether I am on the right track or not.

Lord Phillips of Sudbury: While the Minister is cogitating on that fast ball from the noble Lord, Lord Hodgson of Astley Abbotts—and I think the answer is "no"—I ask him whether he might reconsider the wording of this amendment. It is an entirely meritorious attempt to make things clearer, but does not take account of the fact that there are some quite large charitable trusts that are oral, with no enactment or document. I think, for example, of Children in Need, which operated for several years on an oral trust. The Penlee lifeboat disaster fund was an oral trust. This only deals with enactments or documents.
	I would also recommend that, in reviewing the wording, the amendment should start by saying "any direct or indirect reference in any enactment or document". Those are my two, hopefully helpful, comments.

Lord Bassam of Brighton: My Lords, to answer the noble Lord, Lord Hodgson of Astley Abbotts, first, they are not covering McColl points. I am grateful to the noble Lord for raising the point.
	As ever, the noble Lord, Lord Phillips of Sudbury, is, I am sure, trying to be helpful. I do not know the answer to his question, but I will ensure we have a look at it before Report. Clearly, it may well assist us.

On Question, amendment agreed to.
	Clause 2, as amended, agreed to.
	Clause 3 [The "public benefit" test]:

Lord Borrie: moved Amendment No. 8:
	Page 3, line 19, at end insert "and, where the charitable purpose is claimed to be the advancement of education, the Commission shall, in determining the public benefit—
	(a) have regard to the need to provide significant and continuing benefits to the educational, cultural, social or economic needs of the national or local community;
	(b) consult relevant central or local interests before framing guidance in relation to paragraph (a) above;
	(c) review the public benefit provided at regular intervals; and
	(d) ensure that every such charity registered by the Commission shall publish annual reports on the public benefit it provides."

Lord Borrie: The purpose of this amendment—to which my noble friends Lord Wedderburn of Charlton and Lady Turner of Camden have attached their names—is to ensure that if a fee-paying school is to continue to enjoy charitable status after this Bill is passed, the school must establish that it generally gives something back to the community on a continuous basis. It must show that it provides a clear, significant benefit to the local or national community.
	It is a welcome feature of this Bill, already referred to, that any body established for the advancement of education—or, indeed, under the various other headings of charitable purpose—will no longer automatically be presumed to be for the public benefit and therefore charitable. As the Bill stands, however, it is entirely left to the Charity Commission to determine what is for the public benefit. I am concerned that, without my amendment, charitable status may well be given to all fee-paying schools except those that exist simply for profit-making purposes, like a cramming institution.
	A page on the Charity Commission's website, which I found very profitable to look at, entitled "Public benefit: the legal principles", says that public:
	"benefit must be to the public at large, or to a sufficient section of the public".
	"A sufficient section of the public" is, to my mind, a very loose phrase, allowing charitable status when the educational benefits may be virtually confined to a relatively well-off section of the public, amounting across the country to roughly only 7 per cent of the total school population.
	My amendment will simply give the commission a measure of guidance by setting out some specific, significant criteria to which the commission must, in the time-honoured phrase, "have regard" when considering whether to confer charitable status on any particular school.
	Many fee-paying schools currently provide a variety of benefits to the wider community—for example, making bursaries available to pupils from less well-advantaged backgrounds; and a range of what might be called outreach work, linking with the local community through sport, music, languages and programmes for gifted children. There are also educational improvement partnerships between independent and state schools, such as those report in last Friday's Times involving Millfield Preparatory School and Malborough College. There are many other examples.
	It is sometimes argued that it is quite appropriate that all fee-paying schools—at any rate, those that are non-profit making—should continue to enjoy charitable status because their existence saves the taxpayer the money that it would otherwise cost to educate their pupils at state schools. I have no doubt that in a free society, parents should be free to send their children to fee-paying schools and that, if they so choose, there is an element of saving to the taxpayer. But I do not think that that justifies the cachet and privileges of blanket charitable status for fee-paying schools, or the incentives provided for tax-exempt covenants for grandparents and others, irrespective of whether the school can demonstrate significant community benefit.
	Fee-paying schools continue to create or exacerbate social division in this country. They inhibit equality of opportunity. They involve a considerable distortion of educational resources available to the public generally in premises, grounds, libraries, laboratories and, perhaps above all, teaching resources. Unless, that is, such schools enter into arrangements for the significant sharing of facilities by the sort of outreach programmes to which I have referred. That should be the benchmark against which justification for charitable status or its continuation should be assessed. I beg to move.

Lord Wedderburn of Charlton: I added my name to the amendment tabled by my noble friend because it seemed to me a sensible way to start the debate. If we began with a blank sheet of paper, I very much doubt that we would suggest introducing the system or structure which history has given us. I very much doubt whether we would desire to place 7 per cent of the pupils to be educated in separate schools and in institutions which, in general terms, set fees at a level that only a small section of the public can afford.
	Choice against such a system would not necessarily be lessened by a programme to call those schools charities because they give benefit to the community. That would not be our first choice. Nor would it be to subsidise those institutions by donations drawn from tax resources, which fall indirectly on everyone. The social demerits of such a divisive system, where, as my noble friend said, pupils enjoy resources that in most cases are more expensive particularly in teachers and in smaller groups, and where, thinking of my experience, they can be trained and refined to leap over admission gates prepared by tutors in universities, we would think desirable.
	To move from where we are to a more democratic system of education must necessarily be a long process. The first step suggested here is that "public benefit"—whatever that will mean—should be tested from time to time against the prevailing system. In the Guardian a month or so ago, my noble friend Lord Hattersley wrote that these proposals, or ones like them, were so moderate that opponents of public schools might worry about the consequences. He said:
	"But there is no reason in law or logic why fee-paying education cannot be reduced—with the removal of charity status as a first step—to a level at which its products are no longer influential in society".
	No doubt such a process will not be acceptable to many Members of the Committee, but it illustrates what I said on the first amendment today; that, perhaps unfortunately, social policy issues are at the heart of this part of the Charities Bill. It is a pity that the position has to be discussed, as if it were really a debate about charitable purpose, when in fact it is a debate about educational policy. The proposals in my noble friend's amendment aim, as a first step, to open up the debate on public benefit in respect of the fee-paying educational system, whatever other merits it may have. I hope that as things develop the Charity Commission will see for itself the need to apply the kind of tests which are proposed in the amendments.

Lord Hodgson of Astley Abbotts: It will probably come as no surprise to the noble Lords, Lord Borrie and Lord Wedderburn, that I have considerable difficulty with the amendment as proposed. The noble Lord, Lord Wedderburn, appears to be advocating a degree of social or educational engineering. He is entitled to do that, but I am not sure that we should start it via the Charities Bill.
	What we have achieved in the Bill is a delicate balance as regards the public benefit issue. Therefore, for the noble Lord, Lord Borrie, to talk about blanket advantages in the circumstances in not right. As the noble Lord, Lord Phillips, said, we are in fact creating a level playing field here, in which all charities have to meet a public benefit test, no matter what their purposes are, and must do so on a continuing basis. The responsibility for this is passed to the Charity Commission by Clause 4(1) and we have made the Charity Commission independent of government in new subsection (1A)(4) of Clause 6. It may not be independent enough—we shall come to that later—but we have made a big step towards it and I thank the Government for that. In Clause 4(3), we require the Charity Commission to revise the public benefit objectives from time to time. Although I know that the noble Lord, Lord Wedderburn, wishes to make that "must" rather than "may", it is nevertheless an obligation on the Charity Commission.
	I oppose the amendment on three grounds. First, the amendment shatters this delicate balance and does so in respect of only one charitable activity—that of education. Secondly, the wording adopted by the proposers of the amendment is open ended, to say the least. In paragraph (a) of their amendment, they refer to,
	"significant and continuing benefits",
	and in paragraph (b) they say that the Charity Commission shall,
	"consult relevant central or local interests".
	Who defines what is significant and continuing and who defines what are central or local interests seems to me to open up a Pandora's box in which politics and prejudices could be paraded on either side of the argument. Finally, paragraph (d) seeks to ensure that every such charity publishes an annual report.
	We do not need more paperwork. This Bill will increase considerably the amount of paperwork required to be filled in by charities considerably. The Charity Commission is in charge. It will set the public benefit test and enforce it. There is no reason why one section of the charitable sector should be asked to produce an additional annual report. It would be unfair and prejudicial so to do, besides being expensive. I hope that the Government will resist the amendment.

Lord Brooke of Sutton Mandeville: I support my noble friend Lord Hodgson of Astley Abbotts. I am speaking to matters which were spoken to in Committee before the election by my noble friend Lord MacGregor of Pulham Market, who, unfortunately, has to be in the United States and therefore is not here to make the same points that he made previously.
	In responding to the points made by the noble Lord, Lord Borrie, it seems to me important that the data should be on the record. The benefits that Independent Schools Council schools receive from charitable status are just under £100 million, as my noble friend Lord MacGregor said. In rounded figures, business rate relief accounts for £72 million; tax on investment income is £7 million; tax relief on donations is a further £7 million; IHT relief in legacies is just under £4.5 million; stamp duty exemption is £1 million; and CGT exemptions are £8.5 million. That comes to a total £100 million.
	Those fiscal benefits, against a turnover in the schools in excess of £4 billion, represent rather less than 2.5 per cent of the total turnover. In fact, that figure has shrunk from 2.9 per cent in 2000 as a result of the changes to ACT rules. The benefits given back are fee reductions of £276 million; grants and prizes of £14.5 million; and external charitable activity of just over £11 million, giving a subtotal of more than £300 million. Therefore, the ratio of benefits given back to benefits received is of the order of 3:1.
	In addition, because of the nature of tax law, VAT of £127 million is to be paid on school operations and £69 million on capital expenditure, which is of course irrecoverable VAT, constituting another £200 million that the sector is paying to the Treasury. There again, the ratio is 2:1 against benefits received. Adding the two subtotal contributions gives a ratio of 5:1. That excludes the £2 billion on education that independent schools save the Government in the service that they provide—which is obviously of the order of 20:1. Therefore, if you take the 5:1 ratio for which I provided subtotals a moment ago and the cost of education which the independent schools are shouldering on behalf of the state, you have a ratio of 25:1 overall.
	The noble Lord, Lord Borrie, may think that the charitable status is of great public relations significance to the schools. It does not seem to me to be an exceptionally good bargain in purely financial terms. However, I also endorse most strongly what my noble friend Lord Hodgson of Astley Abbotts said about seeking to provide a whole series of sub-distinctions and subsections in the context of public benefit, when the whole purpose of the legislation is to make matters clearer rather than more opaque.

The Earl of Onslow: I declare an interest. As I said on a previous occasion, my education at Eton was rather a waste of money. But I am a governor of the Royal Grammar School at Guildford, which is an absolutely star educational establishment. Its board of governors is made up of local businessmen, solicitors and lawyers, and the mayor of Guildford and such people, who put an enormous amount of voluntary time into it. We provide bursaries and subsidised fees for various people.
	Our pupil intake was made rather more narrowly based when we were taken out of the state system, where the school was open to anyone without any form of monetary hurdle to overcome. It was a great instrument of social mobility, as grammar schools were. Now we try to do that as much as we can not only by selling education to those who can afford it but also by trying our level best to provide as much as we can afford through bursaries and so forth. To upset that sort of balance in any way would be a bad thing.

Lord Campbell-Savours: When this issue has been discussed over the years there has been a misunderstanding on the opposition Benches about the position taken by many on this side of the House. The issue is not so much that one is opposed to the taxpayer making a contribution to children in private education. The problem is the use of charity law. It is not credible to tell the general public that Eton is a charity, because everyone in Britain knows that it is not. However much the noble Earl may dress up the contribution made by individual schools such as the grammar school that he has just referred to, that does not deal with the central problem of the credibility of charity law which provides that schools that ring-fence provision for young people who have been brought up in conditions of privilege can be described as charities.
	My solution is simple—private schools should be taken out of charity law all together. Subsidies should be paid, but out of provisions in the Finance Bill. Parliament should be required to decide the level of subsidy that it wishes to pay into private education. It is clear that people who put their children into private education save the taxpayer money, so there can be no question but that some element of subsidy should be paid through the tax system. But it should not be done under charity law, because that brings the whole system and principle of charity into gross disrepute.

Lord Bassam of Brighton: The noble Lord, Lord Hodgson of Astley Abbotts, made the important point that we have sought to achieve a delicate balance in the Bill. That is exactly what we have tried to do. I have heard what my noble friend Lord Campbell-Savours and others have said in setting out the rationale behind the amendments, but many of the issues raised go wider than the Bill. As my noble friend Lord Campbell-Savours effectively pointed out, in some respects this debate is in the wrong place.
	The amendment would single out organisations with an educational purpose from all other types of charity. It would seem to apply to all organisations with an educational purpose that sought to register with the Charity Commission, from the small inner-city pre-school playgroup to the British Council, the Wellcome Trust and many of our largest charities that have educational objectives among their purposes.
	I cannot see that singling out educational charities in that way would be of great value. If it is to ensure that the Charity Commission takes a different view of what "public benefit" means for education purposes as opposed to others, the law already provides for that. One of the beauties of the common law definition of "public benefit" is that, within a framework of principles that apply across the board, it recognises that in practice the things that charities have to do to provide public benefit differ greatly according to their purposes. It does that across different headings—say, between the advancement of education and the relief of poverty—and within headings; for example, between two educational charities, one of which helps illiterate prisoners to learn to read and write and the other of which puts on public exhibitions of great art.
	I am not sure that allowing the commission to take account of cultural, social or economic needs when assessing the public benefit of an educational purpose is right. Would it perversely allow a charity that claimed to be for the advancement of education to provide little or no educational benefits as long as it provided other benefits? That is an important question. Nor is it right to put educational charities under an additional burden of explaining and justifying their public benefit credentials. For the integrity of the charity itself, all charities should be under a common duty in that respect.
	We are levelling the playing field by taking away the presumption of public benefit that poverty relief, religious and educational charities currently enjoy. The amendment would put rocks and boulders, craters and molehills, into the part of the field occupied by educational charities.

Lord Campbell-Savours: May I ask my noble friend a very simple question? Does he believe that Eton is a charity?

Lord Borrie: It is in law.

Lord Bassam of Brighton: My noble friend Lord Borrie says that it is in law. The important thing, as I have said, is the public benefit test.

Lord Campbell-Savours: May I press my noble friend on this matter? It is quite a simple question. Does he really believe that Eton fulfils all the purposes that we, as socialists, believe a charity should be dedicated to?

Lord Bassam of Brighton: That is a rather broader question.

The Earl of Onslow: May I help the noble Lord?

Lord Bassam of Brighton: Go on.

The Earl of Onslow: I thought that the noble Lord needed help with the word "socialist", for surely this Government lay no claim whatever to socialism.

Lord Bassam of Brighton: My recollection is that the noble Earl, Lord Onslow, is a graduate of Eton, so perhaps he knows more about it. Or perhaps I have got that wrong.

The Earl of Onslow: Yes, I am.

Lord Bassam of Brighton: In that case, perhaps the noble Earl can offer me better advice on the matter than others.
	We have a delicate balance. It is a formula that we should rely on. I understand that my noble friend Lord Campbell-Savours is endeavouring to be very helpful, and I rest on that.
	If one of the aims of the amendment is to give the regulator the licence to look more closely at any group of charities over which doubts have arisen regarding their public benefit, the law already allows for that. I have seen no evidence to suggest that educational charities, as a whole class, are under any such doubts. For these reasons, the amendment could be damaging, and I suggest that it would be wise to withdraw it.

Lord Borrie: I am most grateful to all those who have taken part in this debate. I am particularly grateful to my noble friend Lord Campbell-Savours who made the extremely powerful point that the credibility of charity law continues to be in doubt so long as Eton—excuse one for the inevitable picking on one school—continues to be regarded as deserving of charitable status.

Lord Lucas: I, too, was very attracted by what the noble Lord, Lord Campbell-Savours, said. I think that he was advocating education vouchers, which is a welcome innovation from that side of the House. The difficulty with picking on Eton—I rather agree with him about that—is that you are also picking on every little PTA around the country. Most of these school-oriented education charities are essentially parents helping their own children. If you do not allow it for Eton, then you do not allow it for your local primary school.

Lord Campbell-Savours: Before my noble friend Lord Borrie replies, may I point out that vouchers are based on grant and not on the tax system?

Lord Borrie: I think that my noble friend was concerned with the credibility of the whole charity system so long as it allows certain—let me not name any—schools to be regarded as charities when any common use of the language would strike people who did not know about the law or the history of this as an amazing concept.
	Although I particularly favoured the speech of my noble friend—naturally—I also appreciated the other speeches. In talking about the school in Guildford with which he is connected, the noble Earl, Lord Onslow, said that when it ceased to be a state school there was created a monetary hurdle to social mobility. I entirely agree with him. The extent to which these difficulties are partially made up by bursaries is fully in line with the points I made. If bursaries are provided, it is one way in which a school can properly demonstrate that, although it is a fee-paying school and the highest proportion of its pupils come from privileged families, none the less, it gives something to the community.
	I say to my noble friend—if I may call him that—the noble Lord, Lord Brooke, in referring to some of the points that his colleague the noble Lord, Lord MacGregor, made earlier, neither I nor my noble friend Lord Campbell-Savours has disputed that parents should be free to send their children to fee-paying schools. Nor has one disputed the benefits and the fiscal points that have been made. But that is a different matter from a particular. The noble Lord talked about fee-paying schools collectively, but that does not deal with the point that each particular school claiming to have a charitable purpose has to provide some public benefit under the new law, even without my amendment. My amendment would simply give the Charity Commission guidance, which would otherwise have no parliamentary guidance at all.
	I take the simple view that it is rather odd that Parliament, which is debating charities for the first time in a long time—apart from the immediate period before the election—has no role in determining what kinds of things should be provided by schools, in this instance, to demonstrate pubic benefit, but that that should be left to the discretion of the ladies and gentlemen of the Charity Commission. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendment No. 9 not moved.]
	Clause 3 agreed to.
	Clause 4 [Guidance as to operation of public benefit requirement]:

Lord Wedderburn of Charlton: moved Amendment No. 10:
	Page 3, line 26, leave out "may" and insert "must"

Lord Wedderburn of Charlton: In a sense this amendment does not follow the end of the previous discussion.
	In the light of what has been said this afternoon, why does Clause 4 put the Charity Commission under an obligation in law to do certain things, but does not oblige it to revise its guidance? Under Clause 4 the commission must issue guidance; it must carry out such consultation as prescribed; and it must publish guidance issued or revised. The Charity Commission has the power to revise guidance but there is no obligation in this legislation for it to do so.
	I should think that everything we have heard this afternoon should make it absolutely clear that there is an obligation to keep charity law up to date on public benefit and that the commission should realise that that is a legal obligation. That suggestion is greatly reinforced by the commission's document, Public Benefit Checks—how we will carry them out? Noble Lords may have seen that document, which states that,
	"different criteria will apply to different charities in different ways".
	The obligation to check public benefit appears to be interpreted in such a flexible way that one wonders what revision will really take place.
	I agree that that goes beyond my amendment, but if it were an obligation there would have to be further words about how it should be done and the time period involved. Why, in the legislation, have the Government leave that so completely for the Charity Commission? I beg to move.

Lord Brooke of Sutton Mandeville: If the amendment moved by the noble Lord, Lord Wedderburn, had included a substitution of the word "review" for "revise", I would have found it tolerable. However, on the principle of, "if it ain't broke don't fix it", it would be perverse for us to insist that the Charity Commission from time to time "must" revise its guidance if the guidance that it inherited is perfectly satisfactory.

Lord Swinfen: The Bill as it stands is right:
	"The Commission may from time to time revise any guidance issued".
	Under the noble Lord's amendment, the Bill would read:
	"The Commission must from time to time".
	How often is time to time? Is it on a monthly or annual basis, or every 10 or 20 years? Putting in "must" does not change the meaning of the subsection at all unless a time limit is included.

Lord Bassam of Brighton: I am very much drawn to what the noble Lord, Lords Swinfen, had to say on this issue. The construction proposed by the noble Lord, Lord Wedderburn, might leave us in a less flexible situation and make it more difficult for the Charity Commission in certain circumstances.
	I am advised by the Charity Commission, which is entirely happy for me to place this on the record, that its intention is to revise its guidance on the operation of the public benefit requirement whenever there has been a material change in that requirement justifying a revision. Such a change could, for example, arise or take place after a decision of the new Charity Appeal Tribunal or a court.
	The commission might also want to revise its guidance when there has been no such change—to amend the wording, layout or presentation of the documentation to make it easier to read, more accessible and more comprehensive, for example. Therefore, to compel the commission to revise not just review its guidance in unspecified circumstances—that is how the amendment would leave it—and at unspecified intervals, to take up the point made by the noble Lord, Lord Swinfen, is neither necessary nor helpful.
	The noble Lord, Lord Wedderburn, can be assured from what I said about the commission's intention that the guidance will be kept appropriately up-to-date. I am sure that the commission will examine it frequently to ensure that that is the case. Clearly, it is in the commission's best interests to ensure that people involved in making applications and so forth have access to common and easily understood guidance. Because of that, I invite the noble Lord to withdraw his amendment.

Lord Wedderburn of Charlton: In moving the amendment I suggested that, if the principle were accepted at Committee stage the amendment would require further specifications. My noble friend on the Front Bench has pointed out that, as it stands, the commission may carry out some revision. In fact, its document states:
	"We will carry out research exercises on fee charging charities and these exercises will include gathering information on their fee-charging policies and practices. [It] will also take account of other factors".
	I am glad to see that, but an obligation should be included. The Minister has explained why it is not and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Phillips of Sudbury: moved Amendment No. 11:
	Page 3, line 32, at end insert—
	"( ) In carrying out such consultation in relation to charities which charge for their services, the Commission shall consider the extent to which public benefit is thereby affected."

Lord Phillips of Sudbury: This amendment was the subject of some considerable debate in Committee last time. I do not know whether it is permitted to read into the record what was said on the previous Bill, but I will try. The report of the second day of Committee on 9 February contains, at cols. 110 to 113, my introduction to this amendment. I do not propose to move the amendment at such length and in such detail on this occasion, not least because many of your Lordships were present on that occasion.
	The point of the amendment is to put beyond doubt the right of the Charity Commission, in drawing up guidance as to the meaning of "public benefit"—that is a hugely important part of the Bill, as everyone agrees—to consider the extent to which public benefit is affected by fees charged by charities for their services. Members of the Committee may think that that is obvious and that they are bound to do that in any event, but it is not obvious. In this regard, the law is not set out on the face of the Bill and as Hubert Picarda, Queen's Counsel, extremely learned in charity law, put it,
	"the mere reversal of the presumption of public benefit",
	which is what this Bill effects,
	"cannot change the declared law on this point".
	The declared law on this point is extremely sparse. Those in the charity world are all agreed that it rests on a single case, Re: Resch, which was a Privy Council case of 40 years ago concerning an Australian hospital run by a religious order. There, and only there, does one have detailed consideration by the High Court of what "public benefit" means in relation to what is a fourth head charity. That would not be too bad if Re: Resch were clear, but it is wonderfully unclear.
	The head-note, which, as lawyers will know, is the summary of the judgments given in a case, of which there were several in Re: Resch, states:
	"it would be a wrong conclusion to draw from the cases that a trust for the provision of medical facilities would necessarily fail to be charitable merely because by reason of expense they could only be made use of by persons of some means".
	In effect, that says that the failure of poor and poorer people to have access to the facilities of the hospital was not a matter determinative of its charitable status. That is very relevant today to charitable hospitals in this country and it is relevant to independent schools, to name another category of charities.
	The finding in Re: Resch was that the hospital was a charity, but the head-note continues:
	"the element of public benefit was strongly present since the evidence here showed that the need existed for the type of accommodation and treatment provided by this hospital".
	What type of accommodation and treatment was provided by that hospital? Lord Wilberforce, who gave the leading judgment, said that the need was satisfied by reason of the fact that the hospital provided,
	"medical treatment in conditions of greater privacy and relaxation than would be possible in a general hospital".
	In effect, all one needs is to provide what Lord Wilberforce spoke about—greater privacy and relaxation—and one is through the public benefit hoop.
	The point I want to make, the point made by many charity lawyers and the point urged on the Committee by the National Council for Voluntary Organisations, for example, is that to rely on that case and those circumstances is a pretty unsatisfactory basis on which to interpret the public benefit test in this Bill. My amendment is extremely modest, rational and not radical. It puts beyond doubt the right, and indeed the duty, of the Charity Commission, when drawing up its guidelines, to look at the extent to which, if at all, public access to the public benefit is affected by the charging policy of the charity.
	The only other point I want to make concerns independent schools. The Independent Schools Council, through the extremely eloquent witnesses who came before the joint scrutiny committee which considered the draft Bill—I see the noble Lords, Lord Campbell-Savours and Lord Best, in the Chamber—told us that independent schools have moved on in the past decade. They said to us that the majority were now anxious to provide public benefit to more than merely the pupils at their schools; to share facilities; in some cases to share teaching; in some cases to share playing fields, theatres and the rest of it. We all said, "Hurrah for that".
	The point is that not every such school is making an effort to spread the benefits to the wider public. I am anxious—and I think many of your Lordships will be—that in this case the better and more progressive schools should provide the yardstick and not the laggards. I do not want to find in two years' time that when the Charity Commission seeks in its scoping survey to determine what public guidance shall mean with regard to independent hospitals it has the case of Re: Resch thrust at it with the argument, "It is quite sufficient, we're providing conditions of greater relaxation and privacy, and on top of that we're relieving the NHS of the cost of treating the people who come to the London clinic, and that's that, no further requirements".
	None of us would want that to be a sufficient response to an inquiry made by the Charity Commission as to the impact on public access of its fee-charging policy. That is all that the amendment is designed to ensure. I hope that it will appeal to the Government now in a way that it did not in Committee last time, although just before the election the Government were minded to allow the amendment had the Bill proceeded through its stages.
	I hope that the noble Lord, Lord Hodgson, who had some quizzicality about some aspects of the Bill last time, will be less quizzical today. I beg to move.

Baroness Pitkeathley: My name is down in support of the amendment. I rise briefly to place on the record how modest I think it is and how much support it enjoys throughout the voluntary sector. Also, I want particularly to remind your Lordships that the public benefit test will become more and more important as we move towards more public services being provided through the charitable sector.

Lord Campbell-Savours: I want briefly to intervene because my colleagues and former colleagues in the House of Commons should closely watch the debate that takes place in this Committee on these matters over the next few days and weeks. This issue will become central to consideration of the Bill in the House of Commons. I would like to press this amendment on my colleagues in the other place, because while the noble Lord, Lord Phillips, used the words he used in the previous debate in Committee, to put beyond doubt the right of the Charity Commission, I read it a little more strongly.
	The amendment reads,
	"In carrying out such consultation in relation to charities which charge for their services, the Commission shall consider the extent".
	Many elected Members of Parliament will want to see the word "shall" because—if I may be frank—they are not altogether confident that the Charity Commission has either the will or the bottle to confront organisations which claim charitable status and which are the beneficiaries of tax concessions. I suspect that elected Members of Parliament will want to feel that somewhere enshrined in the law there is a duty on the Charity Commission to do something, more clearly set out in the amendment than in the legislation that we are being asked to approve.
	Finally, I would say to my honourable friends in the other House when they are considering this debate, that they should know that the noble Lord, Lord Phillips, who has moved the amendment, is a practitioner in law and specialises in this area of the law. He specialises in charity law and brings to our debates his specialist knowledge, and I think that they would do well to consider that and take that into account when they are asked to consider these amendments at a later stage.

Lord Best: My name appears in support of this amendment. I echo the words of the noble Lord, Lord Campbell-Savours, about the proposer of this amendment and all that he has done for us in the pre-legislative scrutiny committee and the previous Committee stage of this Bill.
	I spoke about this aspect of the public benefit issue during Second Reading. The fee-paying question comes to a head with the charities that provide education, as was demonstrated by the discussion between Members of the Committee this afternoon. In Second Reading I stressed, on the one hand, the value of educational provision by independent bodies in the voluntary sector—that is, not in the public sector, nor in the private sector. But I also stressed that if voluntary bodies register as charities, they have an obligation to demonstrate that their work does not—to quote the fourth principle indicated by the court in the case of the famous Re: Resch—
	"wholly exclude poor people from any benefits, direct or indirect".
	In the case of independent schools, charging fees does not of course mean that the operation does not operate for public benefit. Lots of other charities charge fees for services, but a line is drawn when a charity's work confers absolutely no benefit on the wider society.
	I am keen to see sustained the delicate balance that we have created. I hope that that delicate balance, to which the noble Lord, Lord Hodgson of Astley Abbotts, referred, will be maintained as the Bill moves through its next stages. But that requires that delicate balance to be reinforced by an amendment along the lines of the one before us.
	In discussing the matter during the Second Reading debate, the noble Lord, Lord Dahrendorf, spoke eloquently for civil society and for the role of the voluntary sector to be supported for its intrinsic value, even when it was not doing good works or benefiting the wider community in a very obvious way. Accordingly, he commended a very broad definition of "public benefit". While I fiercely support him in his advocacy for a strong, independent and even anarchic third sector, a distinction must be drawn between those voluntary bodies that do not seek the fiscal privileges and tax concessions that go with charitable status, and those that do. If a voluntary organisation makes a commitment to become a charity and claims its financial rewards, even if those are a relatively small part of its total income, the nation's taxpayers are entitled to some return on their investment.
	Meanwhile, schools outside the maintained sector can be set up as purely private businesses. We know that private sector provision of education is growing. The former Chief Inspector of Schools, Chris Woodhead, has established one such private company, Cognita, launched with funds of £475 million. The Independent Schools Council has drawn attention to the dangers that these purely commercial schools will bring if they ignore local communities. Chris Woodhead has made clear that partnerships to help state schools will not be part of the remit of his new schools. This is where the difference lies between a charity and private sector profit-making companies. Those independent schools that accept the advantages over the commercial position faced by purely private education companies must also accept some duties toward the wider community.
	In the field of health, some of the same considerations apply. BUPA is not a charity but a mutual society; Nuffield hospitals are a charity and they get the benefit from that status. In return, some public benefit will need to be demonstrated if the good name and integrity of charity is to be preserved. All that seems to mean that the Charity Commission, in its consultations on public benefit, needs to consider the basis for the delicate balance that we have achieved so far, and to sustain it. That would seem to mean looking with particular care at the position of charities that charge high fees for their services. I support the amendment.

The Earl of Onslow: I should just like to put in a tiny caveat here. I was very influenced by what the noble Lord, Lord Brooke, said about the numbers involved. I suspect, knowing what human nature is, that it does things under stimuli—and that a lot of the public schools and hospitals and so on have gone out of their way to do charitable things to get charitable status, totally failing to take into account that what they are providing is costing them far more than the tax relief that they obtain. If you take away that slight frisson of worry that those institutions feel about doing charitable things, you might reduce the amount that they give.
	The noble Lord, Lord Campbell-Savours, was mocking the concept of Eton as a charity. It was founded as a charitable school for poor scholars, and the scholars are subsidised. It involves itself in a very considerable amount of charitable work and always has done, both in the East End of London and for its own pupils. Funnily enough, although the great public may not recognise it as such, Eton could be genuinely regarded as a charity—and would pass the test involved in the amendment proposed by the noble Lord, Lord Phillips of Sudbury.
	Implied worries can work extremely well as stimuli for the good, and I suspect that what charitable status has done for a lot of these institutions is that it has provided a stimulus for them to be more charitable. They think, "Oh, we don't want to lose charitable status"—whereas if they did lose their charitable status, they might even be slightly better off because they would not have to do the charity. I enter that slightly cynical point of view into your Lordships' discussion.

Lord Swinfen: My Lords, I welcome the amendment, which I think is a good idea, but if it became part of the Bill the Charity Commission would have to take on a considerable number of additional staff to do the additional work that is required and give very sound and good training to those staff to make certain that the work was done well.
	I am not going to mention schools, as enough of your Lordships have already spoken about schools with regard to this amendment. But I am going to mention local authorities and their legal duty to provide homes for people with disabilities and for the elderly. An awful lot of that work is not in fact undertaken by the local authorities; they buy it in from charities and private enterprises. Some of those charities are, I suspect, doing very little more than the bare minimum.
	We still need those charities that extend and increase the quality of the homes that they provide for disabled people and the elderly. In that respect, I know that one of the leaders is the John Groom's Association for Disabled People, because it has for a very long time concentrated on doing what it can to make disabled people as independent as possible. It has not been able to do that purely on the money paid to it by local authorities to house their disabled people. But not everyone is doing that.
	We need to make certain that those charities that are just doing enough to get their payment by the local authorities do more to justify their charitable status. The tax that they can claw back from some of the donations that they receive should be used to advance the work that they are doing. They should not just tread water and stay where they are the whole time.

Lord Naseby: I had not intended to take part in this debate but, having listened to those who have contributed, I thought that I should say a few words. For 13 years I was the chairman of the governors of Bedford School. I am not now, and so I am not declaring an interest.
	The key dimension in an educational establishment of between 600 and 1,200 pupils—whether a boys' school, a girls' school, or a mixed school—is that the expertise is in education. There has been much discussion about whether these schools should be involving the local community. Frankly, I think that is nonsense. It is not using the expertise that lies within the independent sector. You could argue that independent schools should be involving local schools, particular disadvantaged local schools, or pupils who may wish to follow a particular course which is not on offer within their school, so that those pupils could benefit. You could also argue that traditionally these schools have offered bursaries to relatively poor individuals, because it is seen that those pupils have an aptitude for whatever environments or courses are created in the independent schools.
	My plea, therefore, is that those who are carrying out this assessment recognise where the expertise lies within the independent sector, for its public benefit element to be applied to other pupils within the environment that they serve, and to forget about the local community.

Lord Dahrendorf: I have been impressed by the debate and I have listened carefully to the arguments. The noble Lord, Lord Best, has quoted what I said at Second Reading. My concern then was, and to some extent still is, that as we talk about public benefit we think solely of people who are poor or disadvantaged. In my view, that would be too narrow a notion of public benefit—even for the relatively narrow definition of charitable status which the noble Lord, Lord Best, has used.
	I do not rise to speak against the amendment, which the noble Lord, Lord Phillips, called a cautious amendment—an amendment which does not go too far—but I would be concerned if an atmosphere were to be conveyed by this debate to the Charity Commission that public benefit is limited to those who are disadvantaged. In my view, there could be public benefit in supporting, for example, the highly gifted in certain areas, or those with special talents. That is why I am still slightly concerned about the tone of the debate more than about the specific amendment.

Baroness Carnegy of Lour: I go back to when I was chairman of a local education authority of a large rural area of Scotland, which had a population of 400,000 and where there were six fee-paying schools. All those schools contributed enormously to the local community. As the noble Lord, Lord Dahrendorf, suggested, it was to the community in general, not specifically to poor people necessarily. They did it through bursaries, through the sharing of premises and many other things.
	I understand that colleagues in Scotland of the noble Lord, Lord Phillips, inserted an amendment in the Charities Act in Scotland which said precisely this. Those schools which gave most to the local community are saying that they will now find it very difficult indeed to do so. They do it because they charge fees at a certain level. Parents are willing to pay slightly higher fees in order that such local benefits should be provided. They like the idea. People in Scotland are very community-minded and they want this. However, I understand that this is regarded as enormously damaging—particularly in one of the schools in the area where I was chairman of the local education authority.
	I do not think that the Liberal Democrats have the best idea here. It sounds a very modest amendment, but I do not think that it is. The argument could be used, "Your fees are too high. You can't be a charity because you are not doing a proportionate amount in the community". This is a balance that a school has to strike.
	I understand the feeling of the noble Lord, Lord Campbell-Savours, that charity is the wrong approach in relation to a fee-paying school. However, it is something that the law has done and an arrangement that is made. It seems to me that this balance is crucial. I am sorry that we go on talking about Eton. I know that those on the other side have a huge prejudice against what is, in the experience of those who have been there, one of the best and most innovative schools in the country. I am not particularly wedded to the concept of these schools being a charity, but that is the way it is.
	Having discussed it with my friends in Scotland and although I do not know the wording there—I am therefore perhaps speaking somewhat off the top of my head, which one should never do with a lawyer—the general concept is contained within the Act in Scotland and, in the area where I live, is regarded as considerably damaging.

Lord Phillips of Sudbury: Before the noble Baroness sits down, may I reassure her that in my view her colleagues in Scotland are right. That is because the wording of the Scottish Act is radically different from the wording of this Bill.
	It was pressed upon me that it might assist our deliberations to introduce some of the Scottish wording around this very issue. However, I rejected that out of hand because in this instance I believe that the Scots have got it plumb wrong and have introduced a series of measures which are worthy of the commentary made by the noble Baroness; but they have no bearing on this amendment.

Baroness Carnegy of Lour: My only comment—and again I am speaking without having gone into the issue very carefully—is that the matter which is being complained of in my area is precisely this one. Whatever the wording is in the Scottish Act—I know that there are many areas in which it is quite different—people are very worried about it. We are not discussing that here.
	However, the Liberal Democrats were very keen on this concept. It has been put in and it is regarded as damaging. That is my only comment.

Lord Swinfen: Can the Minister confirm that where a school, or indeed any charity, charges fees for a service that they provide, they cannot then claim any tax advantages on those fees?

Lord Hodgson of Astley Abbotts: We have had some expert, persuasive and honeyed words from the noble Lord, Lord Phillips, in introducing this amendment. From the noble Lord, Lord Campbell-Savours, we had equally persuasive words, with perhaps just a hint of menace underlying them. However, I remain unconvinced of the appropriateness and value of this amendment.
	I will not repeat what I said in the debate on Amendment No. 8, but the issue of the delicate balance remains. In my view, we have made the Charity Commission responsible for the public benefit definition. We have made it responsible for its revision; we have given it independence; we have told it that it must ensure compliance. It seems to me that if we have said that we should adopt a hands-off policy and we pass it over to the Charity Commission, it should be left as uncomplicated as possible.
	It is as if we were saying, "Yes, we wish to create a level playing field"—I hate to use the phrase "level playing field" in an analogy about a school—"as far as concerns all charities and public benefit but, by the way, we would like you to tip the playing field a little when you consider the public benefit as it affects charities which charge for their services". I therefore believe that the Government should resist this amendment.

Lord Bassam of Brighton: We have certainly had a wide-ranging debate on this amendment, with support for the proposal made by the noble Lord, Lord Phillips, coming from interesting quarters.
	The Bill requires, through Clause 4, the Charity Commission to publish guidance on the operation of the public benefit requirement. The public benefit requirement is the requirement that a purpose falling within the list in Clause 2(2) must be for the public benefit if it is to qualify as a charitable purpose. The commission has published a draft document, Public Benefit: The Charity Commission's Approach, to illustrate how it would be likely, once the Bill is enacted, to go about its task of ensuring that charities meet the public benefit test requirement. That document contains a section entitled "Public Benefit—the Legal Principles", which describes the legal underpinning for that task. In that section, the commission makes it clear that it will apply the general, overarching principles derived in "Legal Principles" to carry out public benefit checks on new and existing charities.
	It is obviously of paramount importance that the commission should be able to carry out effective checks on the public benefit of charities, both on new organisations applying to register as charities and to existing registered charities. Indeed, the integrity of the charity, and thus public confidence in charities, would be put at risk if the regulator was not able to do that because the Bill failed to provide it with an adequate legal platform.

Lord Campbell-Savours: Will my noble friend tell us what is the legal status of that document?

Lord Bassam of Brighton: Clearly, the contents of the document would be taken into consideration if there were some form of legal challenge.
	The commission's document makes it clear that it can carry out public benefit checks under the Bill as drafted. In describing how it would approach an apparent lack of public benefit in a charity, the commission says:
	"Where charities are not delivering public benefit but are able to, our action might include helping the charity change its stated purposes or its activities so that it is benefiting enough of the public to show and demonstrate public benefit. We might also use our regulatory powers to enforce change if the trustees are not co-operating with us, although we anticipate that we would need to do this in only a few cases . . . However, in extreme cases where the trustees are co-operating with us but the organisation simply cannot in all the circumstances provide public benefit, our action might include removing the charity from the register and making a legal scheme where necessary to ensure that any charitable assets of the organisation will in the future be applied for other charitable purposes close to any purposes that have ceased to be charitable. This would only happen where it was not possible for an organisation to meet the public benefit requirement".
	The commission's words hold good both for charities that charge fees to people who use their facilities and services and for charities that do not charge. The Government believe, and the Charity Commission accepts, that the Bill, together with the underlying common law on public benefit that the Bill preserves, provides a sound legal basis for the commission to go forward with public benefit checks on all types of charity.
	I am not sure that the amendment proposed by the noble Lord, Lord Phillips, would add anything in that respect, since the commission's "Legal Principles" section makes clear that it can already take into account the effect of fee-charging on an organisation's ability to meet the public benefit requirement. It can already undertake the exercise in the way in which the noble Lord understands under its own terms and the legal principles that are set out in the document.
	However, I have listened carefully to the points made in the debate. Since the draft Bill was published about a year ago, the Government have shown ourselves willing to respond to the concerns raised in debate by making changes to the provisions in Part 1, of which the requirement on the commission to publish its guidance is one example. Another is the provision requiring charity trustees to have regard to the commission's guidance where relevant. I am sure that noble Lords would accept that that demonstrates that the Government's mind has not been closed to sensible adjustments, and we have been praised for that.
	Many noble Lords' interventions today will repay closer study on our part, and we of course intend to do that before the Bill returns for the next stage. I cannot at this stage give a commitment that the Government will put forward our own amendment. However, we will continue to set ourselves against anything that might undermine the adequacy of the legal underpinning for the Charity Commission's public benefit checks or anything that might fetter its ability to carry them out as an independent regulator on the basis of the flexible and adaptable common law of public benefit. Having heard that, I am rather hoping that the noble Lord, Lord Phillips, will feel able to withdraw his amendment.
	I was not quite clear what the noble Lord, Lord Swinfen, was getting at. The fees are treated as the income of the charity and would be subject to the ordinary tax regime as it affects charities. I do not think that there is another particular benefit, but if the noble Lord is happy to sharpen and perfect his question, if I cannot answer it today I shall happily write to him, or perhaps we can deal with it at a later stage of the Bill.

Lord Swinfen: What I was getting at was whether the charity would be able to claim back income tax that had been paid by the fee-payer in the form of Gift Aid or some other form of that sort. I wanted it on the record that that was the case. It is my belief that if you buy something from a charity, the charity cannot then claim Gift Aid on the amount that you pay and so increase its income.

Lord Bassam of Brighton: I think that the answer to the noble Lord's question is "No", but I would like to set that out more clearly. Of course, I will as usual ensure that the letter is circulated to those who are interested.

Lord Phillips of Sudbury: I venture to suggest that the noble Lord, Lord Bassam, meant to say, "The answer to the noble Lord is 'Yes'". You cannot use Gift Aid for the purposes of paying school fees. That is correct.
	I am grateful to the noble Lord, Lord Bassam, who in his traditional courteous and helpful way has done the best that he could with his brief, if I can put it that way. The noble Lord, Lord Best, made a useful contrast between private and charitable schools, which is important for us to remember. As regards the tone of the debate, I say to the noble Lord, Lord Dahrendorf, that I absolutely accept that public benefit must be given its full breadth, which includes gifted pupils.
	The noble Baroness, Lady Carnegy, mentioned the Scottish Charities Bill. I repeat that the language in the Bill there, whether it was inserted at the recommendation of the Liberal Democrats or not, is utterly different from this, and in my view is inappropriate for our Bill. The noble Earl, Lord Onslow, made an interesting point about the quiet spur to continue charitable activity on the part of schools, which I agree with. The noble Lord, Lord Hodgson, made his point around the fact that we are giving the Charity Commission the job of deciding what public benefit is, and we should let it get on with it.
	The whole of my argument—and this was not replied to by the noble Lord, Lord Bassam—hinges on the fact that the common law, which is undisturbed by the Bill, is antithetical to the very issue that we have been talking about—namely, whether the Charity Commission can look at the impact on public access of fee-charging by the charity concerned. If the noble Lord, Lord Bassam, would go away from this House today and get the Attorney-General to instruct his counsel on charity matters to give an independent view of the impact of Re Resch on the issue, that might be helpful to the House. My view would undoubtedly be amended if counsel were to disagree with the view that I and many other charity lawyers hold. If on the other hand he comes back and says, "Yes, I think that the noble Lord, Lord Phillips, is broadly right", then I fear the whole basis on which the noble Lord, Lord Bassam, advanced his response is fallacious, and the amendment is needed. I am going to sit down now, and I am grateful to all those who spoke in the debate.

Baroness Carnegy of Lour: Before the noble Lord sits down, will he agree that the provision that he has proposed in this amendment, whatever the wording, is the provision in the Scots Bill? It is precisely what schools in Scotland are complaining is so threatening.

Lord Phillips of Sudbury: No, my amendment is not in the Scots Bill. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 4 agreed to.
	Clause 5 [Special provisions about recreational charities, sports clubs etc.]:

Lord Phillips of Sudbury: moved Amendment No. 12:
	Page 4, line 18, at end insert "unless and until it registers as such, in which event it shall cease to be a registered sports club"

Lord Phillips of Sudbury: This amendment is similar to but significantly different from one advanced on 9 February. It is designed to clarify the fact that a community amateur sports club can change its status into that of a charity if it so wishes. If and when it registers as a charity, ipso facto, according to my Amendment No. 12, it will cease to be a registered sports club. When we discussed this matter previously (cols. 121–4), the noble Lord, Lord Bassam, said that he would take the matter away and rethink it. It is not a huge issue, but it is designed to make absolutely clear the fact that a registered sports club—or community amateur sports club, as it is alternatively called—can transmogrify into a charity, and that if it goes on the register of charities, by that event it ceases to be a registered sports club. I beg to move.

Lord Bassam of Brighton: The Government introduced the community amateur sports scheme (CASC) as an alternative to charitable status for amateur sports clubs in 2002. As the noble Lord, Lord Phillips of Sudbury, knows, it gives qualifying clubs many but not all of the tax reliefs that charities enjoy from both direct taxation and property rates. For those reasons, it has proved to be a popular and successful scheme.
	The provisions in subsections (4) and (5) of Clause (5) of the Bill are to ensure that a qualifying club can choose to be a registered CASC or a registered charity, but cannot do both at the same time. If a CASC did want to become a charity, it could create a new club in charitable form, pass all the CASC's assets to the charity, and then wind up the CASC. During the previous sessions, as the noble Lord rightly recalled, we did offered to consider the proposal he put forward as its intentions are to provide for a simpler process for the transition of a CASC into a charity. Having thought about it some more, we have concluded that although the amendment achieves a perhaps slightly smoother passage from CASC to charity, there is a risk that the deemed disposal by the CASC of its assets during the process would give rise to a chargeable gain that might not be exempt under the charity exemptions. For that reason, we think it is wisest, though we can see merits in the proposal, to resist the amendment.

Lord Phillips of Sudbury: I thank the noble Lord, Lord Bassam, for his response. I do not think that that fear of a deemed disposal for tax purposes is well-founded, and I would suggest that there be discussions outside this Chamber. If it is ill-founded, then perhaps the matter can be resolved positively next time. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 5 agreed to.
	Clause 6 agreed to.
	Schedule 1 [The Charity Commission]:

Lord Hodgson of Astley Abbotts: moved Amendment No. 13:
	Page 77, leave out lines 35 to 42 and insert—
	"5 (1) The Commission shall appoint a chief executive and may appoint such other staff as it may determine.
	(2) The chief executive and other staff of the Commission shall be appointed with such remuneration and on such other terms as the Commission may determine.
	(3) Employment as a member of the Commission or the staff of the Commission shall be included among the kinds of employment to which a superannuation scheme under section 1 of the Superannuation Act 1972 can apply."

Lord Hodgson of Astley Abbotts: This amendment concerns Schedule 1, which is the details relating to the Charity Commission and in particular the Charity Commission's staff. It is of course concerned with the buttressing of the Charity Commission's independence—a matter on which many noble Lords have today stressed importance. The amendment replaces the current wording, which states that any appointments by the commission require the approval of the Minister for the Civil Service. The new wording gives the commission the ability to appoint members with complete independence.
	I said in my remarks at Second Reading that the structure of the committee was a topic that we intended to continue to probe because we felt that more could still be done to achieve an entirely independent Charity Commission. It is important to reiterate that we seek to be reassured that the Charity Commission will be truly insulated from political pressures of any kind. We are very grateful to the Government for having taken on board some steps toward achieving this independence by accepting the amendment which now appears in new Section 1A(4) in Clause 6, by ensuring that:
	"In the exercise of its functions the Commission shall not be subject to the direction or control of any Minister of the Crown or other government department".
	However, Schedule 1 still stipulates in paragraph 5 on page 77, that:
	"The appointment of a chief executive requires the approval of the Minister for the Civil Service as to the chief executive's terms and conditions of service".
	So, as an "independent" body—note I put the word independent in quotes—the commission must still go to the Minister for the Civil Service and ask for permission to take on new members, and it remains tied to the Minister's rates of pay on staffing levels and conditions of work. Is that really independence? One can easily envisage a situation where a political Minister—of whatever colour—could seek to influence the commission by giving or withholding assent to various staffing decisions. In my view, the commission should have the organisational and structural freedom to make its own way and attract men and women of quality to work for it.
	We have already argued this case extensively in earlier Committee sittings on the previous print of the Bill, before the general election. I do not propose to weary the Committee with further repetition. All I ask is for the Government to take this one last step to achieve a truly independent Charity Commission. I beg to move.

Lord Phillips of Sudbury: In the Joint Scrutiny Committee, one recurring theme was the need to allow the Charity Commission to have more latitude in the appointment of staff and particularly in the remuneration of the staff so appointed, in order to enable the commission to have at its command that quality of personnel without which, the Joint Scrutiny Committee felt, no Bill could achieve its optimum outcome. On that broad basis, I lend my support to Amendment No. 13 moved by the noble Lord, Lord Hodgson. I await with interest to hear what the Minister says about the constitutional proprieties of the amendment. I hope that, although the Treasury is now the responsible department of state for the commission, this is within the conventional arrangements—in that it will allow the commission the freedom, within their allocated budget, in terms of numbers and levels or remuneration.

Lord Bassam of Brighton: We return to the issue of independence. I thought we had already got ourselves to a good position during the debates on the Bill prior to the election, but I am not surprised that the noble Lord, Lord Hodgson has come back to this in another form, and I congratulate him on his wit in so doing.
	The Charity Commission already has significant flexibility in the appointment of its staff, under its existing delegated authority. Except for senior civil servants, of whom there are currently only six at the Charity Commission—that excludes the commissioners, who will cease to be civil servants under the Bill—there are no restrictions as such on how the commission determines pay and grade structures. Instead, it is required to work within its overall pay remit to employ the right mix of staff to deliver its objectives.
	Senior Civil Service pay and grade structures are determined by the Cabinet Office, but departments including the Charity Commission have flexibility to make their own arrangements for determining individuals' pay by reference to performance. Therefore, except for a small number of its most senior staff, the Charity Commission already effectively has control over the terms and conditions of service of staff within it.
	The current regime for pay and grading of staff is set out in paragraph 2 of Schedule 1 to the Charities Act 1993. That refers to the Treasury because, at that time, there were standard national grade and pay structures for all civil servants across government. Subsequently, the Treasury made all departments responsible for deciding their own pay arrangements within overall Treasury limits.
	The commission has discretion in how its total pay budget is divided up. It also agrees its arrangements annually with the Treasury to ensure that they are broadly in line with other departments. Paragraph 5(2) and (3) of Schedule 1 does not mean that the Minister for the Civil Service or officials at the Cabinet Office acting on his behalf have to approve the detailed terms and conditions of service of either the chief executive or Charity Commission staff in general. In practice, for the Charity Commission as for other departments, they approve only the broad framework within which detailed decisions on terms and conditions are taken by departments themselves.
	The commission has recently made several successful appointments, not least that of Andrew Hind, appointed last year as chief executive following open competition. That competition attracted a good field of high-quality candidates, which does not suggest that the Civil Service framework in which the commission currently operates prevents it recruiting staff with the skills and experience that it needs. The commission reviewed its recruitment procedures as recently as 2003 to ensure that it was able to recruit and retain high-quality staff. In addition to its performance-related pay system, the commission makes good use of starting-pay flexibility, recruitment and retention allowances and non-pay rewards to both attract and retain high-calibre people.
	The commission has developed a workforce strategy that sets out a comprehensive approach for achieving the changes needed to meet financial, structural and cultural challenge, and the challenge of future delivery needs. Key priorities identified include further modernisation of its pay and reward structures to support a high-performing, highly skilled and flexible workforce, and effective investment in the training and development of its staff to maximise retention.
	The amendment would affect the commission's status as a non-ministerial department. We thought long and hard about the commission's status, and decided that the most appropriate status for it remained that of a non-ministerial department—not least because no suitable alternative had been identified and described to us. The commission fully supports the continuation of that status.
	However, we listened to the points made by noble Lords on the matter in the previous Session, so have made provision in Clause 70 for the commission's status to be considered as part of the review of the impact of this legislation. A person must be appointed to carry out the review within five years of the Bill receiving Royal Assent, and a copy of the report produced as a result of the review must be laid before Parliament. As a result of that review, some alternative status and perhaps an alternative strategy for the Charity Commission may well be identified outside the Civil Service. For as long as it remains a non-ministerial department staffed by civil servants, it is in our view essential that government should retain some control of staff terms and conditions. For that reason, the Government cannot accept the amendment, and I invite the noble Lord to withdraw it.

Lord Hodgson of Astley Abbotts: I am grateful to the Minister for a very worthy reply and for his encouraging words about the future remuneration policy of the Charity Commission. As he will know from our earlier debates, an issue that came up from representations made to us was the inadequacy of experienced staff and the fact that staff had changed a lot, which undoubtedly was linked to how they were paid and remunerated. It is therefore good to know that that point has been taken on board.
	I appreciate also the change to Clause 70, which enables the situation to be reviewed in future. I note all the points, but will have one further thought about the issue, consult externally, and see whether I wish to have a final throw of the dice and persuade the Minister that he should take the last step. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Schedule 1 agreed to.
	Schedule 2 agreed to.
	Clause 7 [The Commission's objectives, general functions and duties]:

Baroness Pitkeathley: moved Amendment No. 14:
	Page 6, line 4, after "promote" insert "and increase"

Baroness Pitkeathley: I begin with an apology because the amendment is worded rather awkwardly. What was intended by it was that the charitable resources objective should be to promote the effective use of charitable resources, and to increase them—to increase the amount of resources, as well as their effective use. With the leave of the Committee, I hope that I may be permitted to speak to the spirit of the amendment rather than the actual wording.
	This is a short but potentially significant amendment that I tabled because of the response that I received when I said, at Second Reading, that the Bill had not taken sufficient opportunity to encourage giving—to promote philanthropy. As I pointed out, in this country we have a long way to go in philanthropy compared with, for example, the United States. The Minister was kind enough to say in his response that my comments were helpful, and I have since received further encouragement from the noble Lords who have added their names to the amendment; I am grateful to them. The amendment would commit the Charity Commission not only to promoting the effective use of charitable resources, but to taking opportunities to increase them.
	As Members of the Committee will know, the voluntary sector gets approximately 30 per cent of its income from individuals and grant-making charities. Increasing charitable resources in the form of philanthropy and income from individuals would, in turn, increase the capacity of the sector. What is important about that form of income is not only that it gives the voluntary sector greater capacity overall, but that it may come with fewer strings attached. It so enables charities to address issues and situations that may not be possible with other forms of income, such as those that they get from government sources or business.
	Philanthropic income gives the potential for charities to be creative, flexible, and sometimes unorthodox or risky in the use of their funds. It allows them to innovate, often with benefits that may emerge only over the long term and are difficult to quantify or may be unfashionable. All those are important elements in a healthy and mature society. There is value in encouraging the supply of such income and, notably, in providing a supportive environment for individuals who wish to give substantially or to create grant-making trusts.
	At present, that is not necessarily the situation. That is because all charities broadly have the same regulation, whether they raise money in the street and provide services, have an endowment or a single sum donated by a philanthropist, or provide grants for other people or institutions. The purpose of the regulation of charities is primarily to safeguard the interests of those who entrust resources to charities, or the interests of recipients of services. In the case of grant makers, however, there is rarely any solicitation of funding from either the public or the Government. Nor are services directly provided to the public. Leaving grant makers to fulfil regulations and reporting criteria that are focused on operating charities and do not fit them well is a burden and a disincentive for individuals to give further.
	The research study by the Association of Charitable Foundations among people of substantial means found that,
	"a fifth of those who had set up grant-making charities had serious reservations about one or more aspects of doing so, the majority of which were related to the burden of bureaucratic regulation".
	General regulation may have adverse effects on the charitable sector as a whole. The report by the joint scrutiny committee on the original draft Charities Bill recognised the vital role of grant makers to the sector, and saw appropriate regulation as imperative to ensure that,
	"the regulatory burden on grant makers does not discourage philanthropy".
	While I am certain that the present leadership of the Charity Commission is aware of this, it would still be helpful to give the commission a specific direction to be conscious of developing philanthropy. Therefore, I am proposing this strengthened objective to increase charitable resources. This would be an incentive for the commission to be more supportive of regulation that would encourage philanthropy and facilitate the work of grant-making trusts. That would in turn increase the funds coming into the charitable sector and enable more good work to be achieved by the sector as a whole. I beg to move.

Lord Joffe: My Lords, my name appears in support of this amendment. Although its substance is only the single word "increase", it is a very important amendment for the charities sector as a whole.
	I declare an interest as the former chair of the three-year Giving Campaign which had the objective of further developing the culture of giving in the UK and ended last year. That campaign was jointly funded by the Inland Revenue, at the request of the Chancellor of the Exchequer and the voluntary sector.
	The charitable sector relies for its very existence on effective fundraising. It cannot expand, nor will it even be able to maintain, its existing level unless additional funding is found in the years ahead. There is an illusion that the British give generously to charities, which tends to be enhanced by the incredibly generous response to catastrophes such as the tsunami.
	However, the statistics show that, disappointingly, over the last 10 years or so—during a period when incomes have risen by approximately 25 per cent in real terms and when personal wealth has more that doubled—the level of giving has actually fallen in real terms. That is partly due to the fact that the wealthy, on average, tend to be relatively less generous than poorer members of our society.
	Against this background, it is not enough for the charity commissioners to promote only the effective use of charitable resources, which are reducing in real terms as a percentage of GDP. It must surely have the additional objective of promoting an increase in charitable resources, and this is what this amendment, which I support, would achieve.
	As the noble Baroness, Lady Pitkeathley, mentioned, I am talking to the spirit of the amendment, rather than the actual wording.

Lord Brooke of Sutton Mandeville: My Lords, I am delighted to support the amendment of the noble Baroness, Lady Pitkeathley, as it is supported by other Members of your Lordships' House. I well remember the debate on charitable giving which the noble Lord, Lord Joffe, initiated a year or two ago—an extremely rich experience.
	I believe that in one of Wavell's books or lectures on leadership he says that nobody is going to get into that book or lecture unless he has led an army in defeat. That is itself an admirable criterion. I have recently been unable to find the reference and, if anybody can point me towards it, I shall be grateful.
	There is no question that it is easier to lead a growth organisation than one in retreat, which is perhaps why Wavell set the test. It is just as easy to say that one is pro-philanthropy as it was for President Coolidge to say that the preacher was against sin.
	We recently had a debate about museums, to which it is possible that the noble Lord, Lord Davies of Oldham, replied. Exactly the same issue came up in that context. As I recall, one of the questions the noble Lord, Lord Davies, was asked—both by my noble friend Lord Eccles and, wholly incidentally, by myself—was when the Government were going to produce a reply to the Gooderson review, which the Government had asked Sir Nicholas Gooderson to produce on this very subject: how we increase the flow of gifts into the museum sector.
	The issues which the noble Baroness, Lady Pitkeathley, has brought forward, as supported by the noble Lord, Lord Joffe, are exactly the same and analogous. It is important that pressure on the Government to respond on these issues remains just as strong in this case as it does in the other. For that reason, I am happy to be a signatory to the amendment.

Lord Hodgson of Astley Abbotts: My Lords, I had originally proposed to oppose this amendment, because it seemed to me that putting "and increase" in line 4 was a potential increase in the regulatory burden. Indeed, I had been trying to persuade the Government, under new Section 1B(3)1—
	"The public confidence objective is to increase public trust"—
	to remove "increase" and put "maintain". I failed to achieve that earlier in Committee. I could hardly support the idea of increasing the effective use of regulatory burden implied thereby.
	If we are trying to find ways to increase the quantum of charitable resources by moving "and increase" to line 5, however, that seems to me to be a thoroughly praiseworthy objective. I am happy to support the amendment.

Lord Bassam of Brighton: My Lords, I am delighted to respond to this amendment because, although I ultimately have to resist it, it is one that has usefully focused on an important part of the Charity Commission's work. We certainly agree with the principle and the spirit behind the amendment; that is, that charities should be using their resources in the most effective way. For that reason, we have continued this objective from the Charities Act 1993, which states on the first page that the commission must promote,
	"the effective use of charitable resources".
	We do not think the amendment is necessary. The commission is not in control of charitable resources; the trustees command them. It would therefore be inappropriate to require the commission to increase the effective use of charitable resources. I am not quite sure how they would achieve that objective.
	We cannot think of a way in which the commission's performance against this laudable objective could be properly measured. While I can certainly understand why the noble Baroness, Lady Pitkeathley, has moved this amendment, and why it has received such warm support, I cannot ultimately accept it on behalf of the Government.
	It is worth directing our attention in considering this matter to Clause 7(2), at the top of page 7 of the Bill, which gives the commission a statutory duty to act in a way compatible with the encouragement of all forms of charitable giving. This was added to the Bill as a product of the debate which I think the noble Baroness contributed to, before the general election, in Grand Committee. We thought it would be a useful addition to the Bill, so we feel we have already met the spirit behind the amendment.
	The noble Baroness also made quite understandable reference to the burden of regulation. We certainly accept the Joint Committee recommendation for a review of the burden of regulation. We are developing proposals for such a review to be carried out by the Better Regulation Task Force, as I have probably made clear before. We understand the force of argument behind the need, as the noble Lord, Lord Hodgson of Astley Abbots, has reminded us on a number of occasions, to minimise the burden of regulation at all times. It is certainly our intention to ensure that we fulfil that—the task could be carried out by the Better Regulation Task Force.
	I know that is a slightly tangential subject. We endorse the spirit of the amendment, but have probably already met it in the way we have framed the legislation brought forward in that new amendment.

Baroness Pitkeathley: I thank the Minister for his warm support of the principle behind the amendment, even though he has had to resist it, and I thank other noble Lords who have spoken in support. I shall read carefully in Hansard what the Minister said but, in the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Hodgson of Astley Abbotts: moved Amendment No. 15:
	Page 6, line 30, at end insert—
	"7. Facilitating development and innovation in the charitable sector."

Lord Hodgson of Astley Abbotts: This amendment follows in the spirit of the amendment moved by the noble Baroness, Lady Pitkeathley. It adds a further function to the commission's general functions listed under new Section 1C of Clause 7. That added function requires the commission to facilitate development and innovation in the charitable sector.
	As I explained on the fourth day of our previous Committee stage, we believe that the role of the commission should not be limited to regulation. It must not be merely a box-ticking entity created to issue guidelines and act as a policeman to the sector. Although, unarguably, the commission's status as a regulator is its central function, the flexibility and dynamism of the third sector may be at risk if the commission's purpose becomes one of restrictive finger-wagging. The list of its general functions given under new Section 1C(2) are: determining whether it is used for charities; encouraging better administration; identifying misconduct; determining whether public collection certificates should be issued; obtaining information; and giving information and advice. Those are the six.
	They all seem rather negative. In our earlier debate on 23 February 2005 (at col. GC 288 of the Official Report) the noble Lord, Lord Borrie, who I am happy to see in his place, was unimpressed by my amendment. I hope that he will forgive me if I say that I think that he was a little unfair, because he seemed to confuse my word "facilitate" with "encourage". I see them as very different: one is passive; the other is proactive. A body that facilitates development and innovation in the charitable sector, as well as one that sets guidelines centrally, would accurately express the balance that the Charity Commission must seek to strike if it is to be remain properly progressive, flexible and forward-thinking.
	At the first Committee stage, the noble Lord, Lord Bassam, described the Government's stance on the issue in the following words:
	"We want to see the facilitation and development of the charitable sector—certainly the Government want that. However, it is not right to describe it as a function of the Charity Commission, which is at its core a regulatory body".—[Official Report, 23/2/05; GC 289.]
	I have some difficulty seeing how adding "Facilitating development of and innovation in the charitable sector" to the list of the commission's functions would undermine its role as a regulator.
	If, as the noble Lord, Lord Bassam, explained, the Government really want development and innovation in the sector, why not make it a function of the commission to facilitate that? The noble Lord went on to explain that the commission could operate only within the confines of the law. He suggested that it would be beyond the remit of the law for the commission to commit any of its energy to facilitating development and innovation. I do not see why that should be the case. He argued (at col. GC 289 of the Official Report of 23 February 2005) that the commission should develop the law by analogy and where it considers it necessary—at column GC 289 on 23 February. I would expect that the commission would want to develop the law so as to facilitate development and innovation in the sector that it is regulating.
	Putting that additional function on the face of the Bill, and thereby encouraging the commission to "facilitate"—a word that I argue is very different in meaning from "encourage"—development and innovation is an important safeguard against the commission becoming too risk-averse and thus inhibiting the ability of the voluntary sector to meet the needs of our rapidly changing society. I beg to move.

Lord Borrie: We had an interesting debate in Grand Committee on this proposal. I went back to read the closing remarks of the noble Lord, Lord Hodgson, after the Minister had spoken. He said that the Charity Commission should have a proactive, facilitatory and helpful role. I agree about the facilitatory and helpful role, but the noble Lord has not let go unnoticed that general function 2, a few lines above where his amendment would be inserted on page 6, refers to:
	"Encouraging and facilitating the better administration of charities",
	which seems perfectly reasonable. Clause 24, which the noble Lord has not mentioned, refers to the power of the Charity Commission to give advice and guidance, which I should have thought was a useful supplementary role, and which is given special mention.
	However, I doubt whether it is the job of the Charity Commission—a regulatory body, as the noble Lord agrees that it is—to go further than being helpful and become proactive. I know that the noble Lord wants the Charity Commission to be proactive in various respects, but I think that being proactive—which must mean promoting charities—is not a suitable job for the Charity Commission, so I doubt whether we should pass the amendment.

Lord Phillips of Sudbury: I must confess that I have two minds about the amendment. I hear what the noble Lord, Lord Borrie, says, and there is much force in it. On the other hand, the noble Lord, Lord Hodgson, made a good point when, looking at new Section 1C—"The Commission's general functions"—he pointed out that it is a pretty arid list, especially when you realise that Clause 6 concerns the giving of advice not to the sector as a whole but to any Minister of the Crown. If we take the objectives and the general functions together, I wonder whether it does not add up to too dry and regulatory a menu, especially as the commission is proud of its dual function of regulator and friend of the charity sector. I shall be interested to hear what the Minister says in response, because we have another opportunity to consider this point at the next stage.

Lord Swinfen: I take the amendment as one encouraging the Charity Commission to look in a friendly manner on the new ideas proposed by charities and would-be charities, rather than being obstructive—saying, "It's not been done before; you can't do it". When I set up my charity, the Charity Commission had absolutely no idea what telemedicine was. It asked, "How does it help anyone?" With the aid of several articles, those dealing with our registration as a charity were taught what telemedicine is and how it works. That was about seven or eight years ago. Today, few people in the country do not know what telemedicine is; then it was very new.
	I would not want the Charity Commission automatically to say, "It's not been done before; you can't do it". I want it to think, "That's new; let's see how it can be done and how it helps people—how it helps the public generally". With a bit of persuasion, in our case, that was done. I am grateful; the charity has been growing exponentially since then because the demand has been so great and it has helped hospitals in remote places in the developing world in post-conflict situations.
	That is how I read my noble friend's amendment and I hope that the Minister will support it.

Lord Joffe: I support the amendment. The very essence of the charitable sector is innovation and creativity—doing things that governments cannot do. The normal tendency for regulatory authorities is to become very risk-averse, as the noble Lord, Lord Hodgson, pointed out. It is important that in this case the regulatory authorities should take the view that innovation in charity should be encouraged.

Lord Bassam of Brighton: This has been a useful short debate on the amendment. In the end, I very much come down on the side of the argument advanced by the noble Lord, Lord Borrie, who has picked his way through where we, the Government, are on this issue and has accurately summarised our position.
	The noble Lord, Lord Phillips, makes the point about legislation sometimes being rather arid in its description. Behind the way in which we have set out our approach to this in the Bill there is a general encouragement—perhaps more than that—to see the Charity Commission as being more facilitative and innovative, in so far as the charitable sector is concerned.
	In some respects the Charity Commission is a rather unique regulator; we do want to see it as an encouraging regulator. We want to see its characteristics develop so new ideas for solving old problems in the charitable world are apparent. Where we perhaps part company with the noble Lord, Lord Hodgson, is that we take the view that the Bill already allows, enables and equips the commission to be an innovative regulator. It is for that reason that we do not think that the amendment is required.
	The commission has five objectives. They are not particularly in an order of priority, but for the purposes of debate on this amendment the most important one is the fourth: the charitable resources objective. The wording of this objective, which is carried over from the 1993 Act, is designed to promote the effective use of charitable resources. It is our expectation that the commission will adopt an imaginative approach towards that. There are already signs that that is the case.
	In support of its objectives, the Bill gives the commission six general functions, of which I single out in this context the function of encouraging and facilitating the better administration of charities. Again, I interpret that as being an encouragement to be more imaginative in approach.
	I am clear that the objective of promoting the effective use of charitable resources, and the function of encouraging and facilitating the better administration of charities, together give the commission full scope and opportunity to encourage development and innovation in the charitable sector. In fact, the commission has already signed up to working in that way. It is part of the commission's new mission statement, published in March, that it will work by "encouraging innovation and effectiveness".
	Clearly the commission is confident that it can legitimately work by encouraging that innovation and effectiveness, whether or not the Bill goes through in its current form, and without needing to be given a specific function in terms of the amendment tabled by the noble Lord, Lord Hodgson. I entirely agree with the commission in that approach.
	It follows on from that that, while I certainly can see merit in what the noble Lord said, we feel that the way in which the legislation is drafted and the way in which the commission has already responded to that, the amendment is not necessary.

Lord Phillips of Sudbury: Taking account of the main strand of the Minister's argument, which is that the Charity Commission does not really have the staff and so forth to engage in facilitation of development and innovation, I wonder whether he would think over the possibility of shifting this to the next clause, "The Commission's general duties". In Clause 7, paragraph 1 of new Section 1D(2) reads,
	"So far as is reasonably practicable"—
	which is important—
	"the Commission must, in performing its functions, act in a way",
	which is compatible with the encouragement of its objectives. My new paragraph (c) would refer to "innovation in the charitable sector". Innovation is nowhere in this important clause; there is a lot of stuff about effectiveness but nothing about innovation. The noble Lord, Lord Joffe, made that point very strongly.

Lord Bassam of Brighton: Innovation is very much allied to being effective, because to be effective one must innovate and get ahead of trends and anticipate what is coming around the corner. I understand the point that the noble Lord has made and I am never a closed mind on these issues but I am not really prepared to go further than that. The Commission is demonstrating that it is providing a response to the challenges that new charities and new ideas coming from the charitable sector are likely to throw up and it is likely to anticipate.

Lord Joffe: The noble Lord, Lord Borrie, referred to administration, which is almost the direct opposite of innovation. I do not think that administration covers innovation in any way whatever.

Lord Hodgson of Astley Abbotts: I am grateful to the noble Lord, Lord Joffe, for that intervention. It was a very disappointing response. The Minister said that the noble Lord, Lord Borrie, got it about right, which is praise indeed. The noble Lord, Lord Borrie, gave three reasons for wishing to reject the amendment. The first was that new Section 1C(2)(2), in Clause 7, is about facilitating better administration. However, as the noble Lord has just said, that is not what my amendment is about. My amendment is about looking forward and encouraging the emergence of new forms and not being risk averse.
	The second reason given by the noble Lord was that Clause 24 gave the Charity Commission,
	"Power to give advice and guidance",
	but that is a completely different sort of activity from being part of its general functions.
	Thirdly, the noble Lord quoted back to me my remarks from the previous Committee stage. He said that I had used the words, "facilitatory", "helpful" and "proactive" and that I was to be hung on the fact that I had used the word "proactive". He accepted that the first two words were in accordance with the meaning of the word that I used, but that I had been unguarded enough towards the end of the debate to use the word "proactive".
	The noble Lord, Lord Phillips, was right when he said that this is an "arid" list of functions. The Minister went on to talk about being an "encouraging regulator". I see nothing about innovation here. The Government's answer on this point is not good enough and I wish to test the opinion of the House.

On Question, Whether the said amendment (No. 15) shall be agreed to?
	Their Lordships divided: Contents, 93; Not-Contents, 93.

Lord Geddes: I must advise the Committee that there have voted Contents: 93, Not-Contents: 93. There being an equality of votes, in accordance with Standing Order No. 57, which provides that no proposal to amend a Bill in the form in which it is before the House shall be agreed to unless there is a majority in favour of such amendment, I declare the amendment disagreed to.
	Before calling Amendment No. 16, I must advise the Committee that there is a misprint on the Marshalled List. The amendment should not include the word "from". It should read:
	"Page 7, line 6, leave out ", in performing its functions,".

Lord Phillips of Sudbury: I deeply regret, the Deputy Chairman having made that correction, that I shall not be proceeding with the amendment.

[Amendment No. 16 not moved.]

Lord Swinfen: moved Amendment No. 17:
	Page 7, line 14, leave out ", so far as relevant,"

Lord Swinfen: In moving Amendment No. 17, I should also like to speak to Amendment No. 18.
	The purpose of the amendments is to require on the face of the Bill that the commission must act at all times, and not merely when it thinks it advisable, in accordance with the principles of best regulatory practice, and must act fairly and reasonably. Omitting the words "so far as relevant" would prevent the commission choosing when it is expedient to act in accordance with best practice.
	The requirement for fair and reasonable conduct by the commission has had much support in the House. Many noble Lords, such as myself, believe it should be on the face of the Bill because the commission has not always behaved this way, as I mentioned at Second Reading. In the Little Gidding Trust case, the High Court refused to consider the behaviour of the Charity Commission, even when that was identified as a central issue. If the High Court had not recognised that as law, it might be wise to include these words in the Bill so that both the High Court and the commission do so in future.
	During the debates on the previous Charities Bill before the election, I and others asked for "fair, reasonable and proportionate" behaviour of the commission. In spite of the claims that it was already the law and therefore did not need to be on the face of the Bill, the Minister has now allowed "proportionate", and I am grateful for that. But it does not go as far as "fair and reasonable".
	The charity sector is the only one which is founded on morality, and charities expect a standard of regulation likewise founded on a moral bedrock. The commission, as I said at Second Reading, has not always met this high standard, and it is necessary that it should.
	I quoted a number of examples at Second Reading, and I am distressed to say that since then, I have heard from a charity that there are still similar problems. I have been specifically asked by the charity not to mention its name or to give details, because it is frightened that that would adversely affect its standing with the Charity Commission. It is a sorry state of affairs if any charity thinks that.
	A recent survey by the commission revealed that 44 per cent of its stakeholders think that it is not doing a good job. Why would charities utilise the commission for advice if they lack confidence in it? How is the commission's enhanced advisory role to be delivered while charities continue to lack confidence in their regulator?
	The new management at the Charity Commission have committed themselves to acting fairly and reasonably in their recently published policy document, but that is not something that it can be held to. Future management could reverse or ignore this. I urge the Minister to bolster the commission in its reforming process and accept that both the commission and the courts need to be told explicitly that fairness and reasonableness are legal requirements, thus enabling charities to have confidence in their regulator. I beg to move.

Lord Dahrendorf: I support the noble Lord, Lord Swinfen, in his Amendment No. 18. In his generous and helpful letter, the noble Lord, Lord Bassam, explained his reasoning, and that of the Government, in including "proportionate" but not "fair and reasonable". His main argument was that if the words were included in the Bill it would seem that we were trying to criticise the commission and its past behaviour. The noble Lord, Lord Swinfen, has done so and has given evidence for what he has said.
	Even apart from such criticism, however, I argue that the Bill is not written to please the Charity Commission—or any other authority, for that matter. That is not the Bill's purpose. It is written, if anything, to encourage charities—large and, above all, small. If there is the slightest reason to believe that charities would be encouraged by including the words "fair and reasonable" in the Bill, it is a good enough reason to do so. I therefore hope that it is still possible to include these words.

Baroness Howe of Idlicote: I, too, support the noble Lord, Lord Swinfen, in his amendment. I spoke on the same subject at Second Reading and in Committee before the Bill was amended. The case for the amendment has been put brilliantly not only by the noble Lord, Lord Swinfen, but also my noble friend Lord Dahrendorf.
	It is important to encourage charities. There have been comments about past behaviour, and this would be one way to reassure charities that the future will be different. We have had a firm assurance from the Charity Commission and the new chairman about future behaviour, but including these words in the Bill would do a great deal to reassure everybody. I do not see the logic of refusing the amendment.

Lord Hodgson of Astley Abbotts: I support my noble friend in his Amendment No. 17. Indeed, I rang the Public Bill Office yesterday to ask to add my name to it but was told that unless another amendment was tabled, it would not, quite rightly, reprint the Marshalled List merely to add my name in one place. So my name does not appear, but it is there in spirit.
	The Government are to be congratulated on having added subsection (4) of new Section 1D on page 7, covering best regulatory practice. However, the insertion of the words, "so far as relevant" seems to introduce a weasel factor, which we could do without. It would be much better and clearer if the phrase "so far as relevant" was removed and we made it clear that these regulatory practices have effect peradventure and that there is no way that anyone can ease out of them.

Lord Phillips of Sudbury: I support Amendment No. 18. While I think that Amendment No. 17 is unnecessary, Amendment No. 18 is important for all the reasons advanced by those who have spoken thus far. Let me add to the point of the noble Lord, Lord Dahrendorf, by saying that this is a citizens' Bill; it will not, I hope, be confined to the legal profession and other specialists.
	A great many voluntary organisations and thousands of small charities will have recourse to the Bill. We can be quite sure that the Charity Commission, quite rightly, in the vast amount of guidance and literature that it pumps out on its website, will emblazon the words of the Bill on crucial parts of its guidance and advice. Although it is always difficult to alight upon the particular collection of adjectives that you want to embody the virtues that you are seeking to uphold, I think that to omit "fair and reasonable" is a bit perverse. If it is said that the words are implied—which is true—my answer is that as so many other virtues are implied but are on the face of the Bill, these should be included as well. Including these words will support confidence in the Charity Commission, not dent it. I hope that the Government will be minded to do so, although I sympathise with the problems of drafting this part of the Bill, which must have been taxing.

Lord Howard of Rising: I support my noble friend Lord Swinfen in introducing the word "reasonable". When the Bill was discussed previously in Committee there was a certain reluctance by the Government to include that word, and it is difficult to understand why it should not be included if, as the Government claim, there is already a duty to be reasonable. There are many small charities and the Charity Commission is always quite free and easy in telling them what to do. The presence of the word "reasonable" would give charities the confidence to stand up to an organisation that has an inclination to do its own thing rather than support those who are giving.

Baroness Scotland of Asthal: I am happy to return to the fray and to find ourselves just where we were when I left it.
	I see the intent behind Amendment No. 17, and I reassure the noble Lord, Lord Hodgson, that those are not simple weasel words, or the weasel factor. We entirely agree that when the commission is regulating it must apply the principles of best regulatory practice in performing its functions, as the noble Lord, Lord Swinfen, has made plain. We have, however, added this new duty to do precisely that, and to make it absolutely clear.
	The qualifier of "so far as relevant" is necessary because the commission's functions go wider than its regulatory functions. It is worth noting that the word "functions" in new Section 1D has a wider meaning than the phrase "general functions" in new Section 1C.
	Among its functions the commission prepares an annual report, recruits staff and performs other functions that are not regulatory in nature but ancillary to regulation. I assure noble Lords, and I hope that the noble Lord, Lord Swinfen, will agree, that it would not be appropriate to apply the principles of best regulatory practice in those kinds of instances. That is why additional words have been added.
	I hope that I have reassured noble Lords that the Bill is drafted to ensure that the commission applies best practice principles to all its regulations. The amendment is therefore not needed. I know that that issue was given support by the noble Lord, Lord Dahrendorf, and the noble Baroness, Lady Howe.
	I now turn to Amendment No. 18, which drew the most support—particularly by the noble Lord, Lord Howard of Rising, who added his voice last. We have debated the two little words "fair" and "reasonable" on several occasions—most recently on Second Reading on 7 June. The Government have given their view many times, and I invite the House to consider the comments of my noble friend Lord Bassam at col. GC 305 in Grand Committee on 23 February, and to the relevant parts of my noble friend's letter, which was sent to all noble Lords who spoke on Second Reading on 7 June. A copy is in the Library.
	I shall summarise. We are in no doubt that the commission, like other public bodies, already has a duty in administrative law to use its powers reasonably. They are as affected by that wide body of jurisprudence as any other public body. We do not think that there is any need to include a statutory provision to give the commission that duty.
	If Parliament felt it necessary to give the commission that duty through the Charities Bill, the implication would be that Parliament did not see the commission as being under that duty at present. It is not a question of feelings; the duty exists now. The commission must behave reasonably. We do not think that adding the words "fair and reasonable" to the words,
	"proportionate, accountable, consistent, transparent and targeted",
	which are already in the Bill would add anything helpful.
	Indeed, if the noble Lord, Lord Lester, were here, he would probably give us an exposition of what "proportionate" means. If you have to behave proportionately, a fortiori the facts speak for themselves and you have to behave reasonably.
	The words already in the Bill are powerful. We listened to the concerns last Session and amended the Bill accordingly. I thank noble Lords for the compliment in relation to that, but we do not see the need to amend it further. Because the matter is already covered, we are not minded to accept the amendment.
	I hear, too, what the noble Lord, Lord Swinfen, said about the dissatisfaction with the commission. Those figures are certainly new to us and we do not recognise those issues. Ninety-three per cent of charities that have use of the commission's services are satisfied according to the commission's figures. It was right for me to put that on the record.

Lord Swinfen: I thank all those who spoke in this short debate—particularly those who supported my amendments. The noble Baroness, Lady Scotland, is of course doing her duty as a Minister. I note from being in your Lordships' House for the past 28 years that Ministers in this House are never allowed to give way on any single point. That seems to be a rule, especially in Committee.

Baroness Scotland of Asthal: In this Bill there have been innumerable instances of the Government giving way. We have listened very carefully, and the amendment gives voice to the fact that we gave way last time. There comes a point, however, when we must say that this is now a reasonable accommodation and that the facts are well supported. It is just that that is where we are now.

Lord Swinfen: Fair enough. The Government have moved some way on the Bill. As the noble Lord, Lord Phillips of Sudbury, said, it may be perverse not to include the words "fair and reasonable", particularly as that would give a great deal of comfort to a large proportion of the charity world.
	With regard to the comments of the noble Baroness on "relevant", I am not a lawyer, but they sounded a little pedantic. It may be a nice legal point that, as a non-lawyer, I do not understand. My father who was a barrister probably would have understood, and my grandfather, who was Master of the Rolls, probably would have understood even better. I am not a lawyer and I have no intention of becoming one. I would probably not be accepted or pass the exams in any case.
	I feel that "fair and reasonable" should be on the face of the Bill. It is not my intention to divide the House tonight, but I reserve the right to return to the matter on Report. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendment No. 18 not moved.]

Lord Hodgson of Astley Abbotts: moved Amendment No. 19:
	Page 7, line 22, at end insert—
	"6. In managing its affairs, the Commission must differentiate clearly its regulatory from its advisory functions."

Lord Hodgson of Astley Abbotts: The amendment adds to the commission's general duties, which are listed in new Section 1D of Clause 7. There are currently five general duties and the amendment would add a sixth.
	To avoid repeating arguments from the discussions that we had on the advisability of including the amendment from the first Committee stage, I shall summarise the main points.
	The distinction of the Charity Commission's advisory and regulatory functions was subject to rigorous investigation and discussion during and after the Joint Scrutiny Committee's hearing of evidence on the draft Bill. The need for separation was the subject of recommendation 20 of that committee, yet nothing requiring such a distinction has so far been written into the Bill.
	Supporting the Joint Scrutiny Committee, the Association of Charitable Foundations, the Charity Law Association, the National Council for Voluntary Organisation and the Association of Chief Executives of Voluntary Organisations have all highlighted the need for the commission to distinguish its regulatory from its advisory functions.
	This is particularly relevant in light of the fact that many small charities are dependent upon the advice of the commission. Such charities do not have the resources of the larger charities, which might have a strategy unit or a legal department. The advice these charities seek from the commission might become confused with regulations administered by the commission.
	The commission's central task—we agree—is as a regulator. Therefore, its central interaction with charities will be in a regulatory context. Advice from the commission needs to be clearly distinguished from any regulation as it might be wrongly assumed that the latter was intended and, in consequence, a suggestion misinterpreted as a command, hence the term "regulatory creep", which is what this amendment battles against.
	Everyone seems to be in agreement about the value of this amendment being included in the Bill so it seems strange that this is one that the Government have not accepted. The noble Lord, Lord Bassam, said:
	"I understand why noble Lords want to see this included on the face of the Bill. In seeking that objective, they wish to compel the commission to take forward the recommendation. But both the commission and the Government have accepted the recommendation and, in the sense of changing practice—which is what this is all about—the noble Lord is pushing at an open door".—[Official Report, 23/2/05; col. GC 313.]
	So it appears that the only reason the Government wish to exclude this important duty of the commission's from the face of the Bill is that it is "as good as done" already. That is an argument we hear too often and, needless to say, I do not see it as a strong one. My point is this: if this distinction is as good as done, why not incorporate it into the Bill? I beg to move.

Baroness Scotland of Asthal: The noble Lord, Lord Hodgson, rightly said that we debated this amendment in Grand Committee last Session, on 23 February. I thank him for referring the Committee to the comments of my noble friend Lord Bassam in Hansard at col. GC 312, which still stand. I also draw Committee Members' attention to the letter sent by him to all colleagues who spoke at Second Reading on 7 June. I placed a copy of that letter in the Library.
	As we have said before, the Government and the Charity Commission wholeheartedly agree with the principles behind this suggestion. But the Government believe that it is more appropriate to leave its implementation to management action by the commission rather than deal with it in statute.
	The commission aims to differentiate clearly between advice and regulation. For example, at the beginning of its publications, it states that the words "recommend or advise" are used where the commission is suggesting to trustees actions which it considers to be good practice, but which do not represent a legal requirement, and the word "must" is used to refer to actions that trustees, or their agents or employees, are obliged to take by law. The commission has been working to make this as clear as possible. In its recent publication, The Essential Trustee, a clear symbol is used to help readers easily identify those sections which contain a legal or regulatory requirement. The commission is continuing to review its structure and communications to this end.
	I am sure that the noble Lord, Lord Hodgson, and others would agree, we want to ensure that the practitioners, especially the small charities, when they come to look at the commission's documentation, can say, "This is what I need to do and this is advice that I can take seriously in terms of good practice". That is what we need to do on a pragmatic basis and we believe that that is where the focus should be.

Lord Hodgson of Astley Abbotts: I am grateful to the noble Baroness for those further reassurances. I have taken care to read the letter from the noble Lord, Lord Bassam, and to note what he said there. We have taken this matter about as far as we can. Although some residual concerns remain, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Swinfen: moved Amendment No. 20:
	Page 7, line 22, at end insert—
	"6. In performing its functions the Commission must have reasonable regard to the respective interests of trustees, charity staff, volunteers, donors, beneficiaries and other stakeholders in charities."

Lord Swinfen: The purpose of this amendment is to require the Charity Commission to have regard to the interests of the people involved in charities as well as a charity's material assets. These people include the beneficiaries, who are often singularly unable to defend their own interests.
	The commission has sometimes acted without any thought for the consequences for a charity's people. Indeed, I am told that one head of the investigations department notoriously said that any casualties among the trustees were an inevitable result of the investigations process. This approach can lead to an abuse of its position, which not only discourages the people concerned and others like them, but damages the charity in question and undermines the voluntary principle itself.
	There is a significant gap in the regulation of charities which has historically been concerned only with the material assets of a charity and ignored the charity's people, whether they were assets such as trustees, volunteers and donors, or liabilities in the form of beneficiaries. As charities exist for their beneficiaries, it is rather odd that charity law allows the regulator to ignore their interests. I feel sure that, with the examples that I gave at Second Reading—which I shall not repeat now in order to save time—this was an unintended consequence of the way in which the commission had acted. This amendment is designed to make members of the commission look before they leap and think how best they can deal with the matter without damaging those whom the charity is trying to support. I beg to move.

Baroness Scotland of Asthal: Again, we discussed this issue at Second Reading, as the noble Lord rightly said. The Committee discussed this matter earlier today and we are in agreement with the general intention behind this amendment, but we do not think that it is necessary. There is no doubt that the commission should take into account the interests of those affected by its actions. Two of the principles of best regulatory practice on the face of the Bill are that regulatory action should be "accountable" and "transparent", and these will involve the commission having regard to the interests of stakeholders.
	The commission already takes customer service seriously. Last year, it established a group called the Customer Network for people from across the sector, including but not limited to trustees. Members of the group are invited to give feedback, suggestions and views on a wide range of policy issues. There are currently 65 members, but the commission hopes to increase this to 150, reflecting the diversity of the sector in terms of income levels, charitable activity and location and there is more information on the commission's website about the network.
	The commission also has a devoted customer service section led by a senior member of staff and there is a customer service champion at board level. And the commission's strategic review emphasised that it wants to continue taking into account the interests of its stakeholders. In the review, it states that it will,
	"encourage greater dialogue with charities and trustee, becoming better listeners and being more collaborative, outcome-focussed and"—
	the noble Lord's word—"proactive".
	So again, we see that the amendment is well-intentioned. We absolutely understand why it is there, but there is no need for it in the Bill. I hope that I have been able to reassure the noble Lord that the commission—indeed, the Government—takes this issue as seriously as it is clear he does.

Lord Swinfen: I thank the noble Baroness for her response. However, I find it rather disturbing. She talks about customers. Charities are about beneficiaries. She is referring to customers as being the charities that are trying to help the beneficiaries. I may be wrong, but that is my impression. However, I will take the matter away and read carefully what the noble Baroness has said. I reserve my right to return at a later stage. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 7 agreed to.

Baroness Royall of Blaisdon: I beg to move that the House be resumed. In moving the Motion, perhaps I may suggest that the Committee stage begin again not before 8.30 pm.

Moved accordingly, and, on Question, Motion agreed to.
	House resumed.

Vauxhall Tower

Lord Baker of Dorking: rose to ask Her Majesty's Government whether they will revisit the decision to give planning permission to the Vauxhall Tower.
	My Lords, this short debate enables the House to consider an appalling planning decision to allow the erection of a very tall tower of residential flats on the south bank of the Thames almost next to Vauxhall Bridge. The decision has not yet been announced, but it is only a matter of days before it is confirmed.
	The history of the site is that, for some time, the developers, Berkeley Homes, have been pressing to build a large tower on the site. The proposals that we are discussing tonight were first tabled by the company in January 2003. In June 2004, there was an inspector's inquiry, the findings of which were absolutely decisive and dismissive. Very rarely have I seen a report from an inspector that rules out completely, on every possible ground, a planning application.
	We thought that that was the end of it, but in March of this year, Mr Prescott, the Deputy Prime Minister and Secretary of State with responsibility for the environment, rejected the inquiry's findings and said that he was minded to give approval for the building, provided there were more affordable housing units, which has now been agreed. So it is only a matter of days before it is confirmed.
	Although I am very strongly opposed to the tower on this particular site, I am not opposed to high buildings. It fell to me as Secretary of State for the Environment in the mid-1980s to give approval for Canary Wharf. The Canary Wharf approval was for three cylindrical towers, but that changed. I remember going around London with my officials trying to imagine and envisage the skyline of that development.
	Nor am I against modern architecture. I like the "Gherkin". I think that it adds to the skyline of London. Later this year, I shall certainly not oppose Bishopsgate Tower or the "Shard of Glass", both of which are much taller than the Vauxhall Tower. I shall not oppose them because they are clustered together. Very tall buildings in any urban environment should be clustered in one part of a town or city. That is the pattern over virtually the whole world, apart from some far-eastern cities.
	My objection to this proposal is that it is a stand-alone development at Vauxhall. The inspector's report was devastating. I want to focus on three of his conclusions. The first states:
	"The height and dominance of the proposed tower would adversely impact on the townscape and local parks and on the setting of the Vauxhall, Vauxhall Gardens, and Albert Embankment Conservation Areas and conservation areas in the City of Westminster, and have a detrimental effect on London's riverscape and locally important views from across the river, Lambeth Bridge, Westminster Bridge and other Thames bridges, and the river banks, contrary to policy CD2, CD16 and V17 of the adopted Unitary Development Plan"—
	that is, the Lambeth plan; Lambeth oppose the this—
	"and policy 37 of the deposit draft Unitary Development Plan".
	The inspector was saying that the intrusion of this very large single tower at that point would have a damaging effect on the views of the riverscape and skyline of London. It is a World Heritage Site. It is absolutely extraordinary that a World Heritage Site should be treated in this way. UNESCO has already advised everyone in the world not to build tower blocks and large buildings near World Heritage Sites.
	Extraordinarily enough, Mr Prescott, in his letter approving this development, recognises that there will be damage. He therefore considers that while the proposal would have a damaging effect on the setting of these conservation areas and the World Heritage Site, the effect would be minimal. He goes on to say that he,
	"agrees with the Inspector that the proposal would act as a further distraction from the view of the Palace of Westminster from Westminster Bridge and would have damaging effect on the setting of the conservation area and view of the World Heritage Site. However, given that the tower would appear as a relatively small feature, the Secretary of State considers that the damage caused would be limited and although damage caused is afforded considerable weight, this is tempered by the limited extent of the damage".
	Mr Prescott is saying that there would be only a little damage. It is like the housemaid's illegitimate baby which was only a little sin. Of course it is entirely judgmental, but it is damage, and the Secretary of State recognises that it is damage. I wonder whether he stood on Lambeth Bridge or Westminster Bridge and looked upriver to see the damaging effect. I very much doubt that he did. If he did, he could have stood on the same sight as Wordsworth in 1802 when he wrote,
	"Earth has not anything to show more fair:
	Dull would he be of soul who could pass by
	A sight so touching in its majesty".
	Wordsworth anticipated Mr Prescott:
	"Dull would he be of soul".
	Anyone standing on Westminster Bridge, looking up and seeing this monstrosity less than half a mile away would agree that it is damage. Here we have a Secretary of State who accepts the damage. It is quite remarkable that that is so clearly expressed in the letter.
	The inspector's second condemnation is that,
	"The scale and design character of the proposed development would be out of keeping with and discordant to the existing St George Wharf development, contrary to policies CD15",
	and all the other policies that I have just mentioned. That means that Mr Prescott has driven a bulldozer through London planning. The Lambeth plan says very specifically that it does not want large buildings. It states that Lambeth's,
	"policies indicate that planning permission will not normally be granted for buildings which significantly exceed the height of their surroundings".
	That is why Lambeth did not approve the plan. That is part of the planning process of London, which has been approved by the London Borough of Lambeth.
	One of the jobs of the Secretary of State for the Environment, as I know because I once held that post, is to support the planning system of our country and not to drive through it, if it does not happen to suit one on a particular day. The Secretary of State has driven through not only the borough plan but also the other guidance in the London Plan on strategic and significant views. For that reason it is another very bad decision.
	The inspector's third point was that,
	"The design character and detail in the submitted drawings fail to demonstrate that the proposed tower would be of a sufficiently high quality and of the world class, iconic"—
	remember the word "iconic"—
	"standard of architecture required in this location in view of the inevitable prominence of the proposed tower, contrary to the draft London Plan",
	and all the policies which Mr Prescott has driven through.
	I asked your Lordships to remember the word "iconic" because, in Mr Prescott's letter, some poor civil servant has drafted the phrase:
	"he does not recognise 'iconic status' as an appropriate test of the suitability of a proposal".
	The civil servant who drafted that could not have been aware that Mr Prescott made a speech to the Prince's Foundation in which he asked for the "wow factor" in architecture. I looked up the word "wow" in the Oxford English Dictionary and found that it means "a sensational success". Mr Prescott may prefer the three-letter word "wow" to the six-letter word "iconic", but it means exactly the same. And yet on one occasion he is quite prepared to say that he wanted an outstanding building. He said to the Prince's Foundation—a friendly audience that will say, "We've got a very good Secretary of State who wants 'wow factors'"—that he wants to encourage architects. But when it comes to an application which does not have the "wow factor" about it at all, he nods it through.
	When I say that it does not have a wow factor, I should add that it stands alongside the development of St George Wharf. Your Lordships might know this building. As one drives along the river just past Vauxhall Bridge, it is the building with the green-umbrella roof sticking out. Each year, the Architect's Journal has a competition for the least favourite building. It asks the 100 leading architectural practices in the country to designate their least favourite building in the world—not just in London and not just in England but in the world.
	In 2003, St George Wharf won it by a mile—it was the least favourite. Not only that, it won it again in 2004. Not only that, it won it again in 2005. For three years it was the least favourite building; and the team that brought us the least favourite building, the developers and the architects, are now going to bring us the Vauxhall Tower. If only we had a Secretary of State who could recognise a wow factor.
	One might ask why that has happened, because everyone apart from two people at the public inquiry—the developer, obviously; and I shall come to the other in a moment—were all against the development. The Covent Garden Authority, Riverside Maintenance, the Vauxhall Society, the West London River Group, the Crown Reach Residents' Association, St Marylebone Society, Waterloo Community Development Group, Thames Bank, the River Thames Society, and English Regions Network were all opposed to it.
	The only person who turned up in person and spoke for the proposal was Mr Livingstone, because Mr Livingstone wants tall buildings anywhere. He took the trouble to go down, and I suspect that he took some other trouble, to which I shall come in a moment, to ensure that he got his way. A fortnight ago, Mr Livingstone attended a developers' conference in Cannes. That must be reassuring for the electors in London; that their Mayor can attend developers' conferences, particularly when they are held in Cannes.
	Mr Livingstone said at that meeting that if the London boroughs did not support his housing plans, he would crush them. He used the phrase, "crush them". Immediately he did so the spin doctors went into rapid activity and said that it was only a joke. When Mr Livingstone says something like that it is not a joke. But he does not need to crush the London boroughs: he has got Mr Prescott to do it for him. Mr Prescott has ridden through the agreed plans of London to approve this development. It is a disgrace.
	I find it particularly ironic that this development has an element of Aldous Huxley's Brave New World. Your Lordships will remember that in the brave new world the rich and the toffs were called alphas, and they were at the top. The gammas, the deltas and the epsilons—the proles—were down at the bottom. That is how the development is to be done. In that great tower there will be no social affordable housing. It is all for the alphas. It is all for the toffs. The affordable housing is down below, possibly even subterranean—I have no idea.
	So we have a Labour Deputy Prime Minister, a man who I think would describe himself as a good old-fashioned socialist, giving approval for a tower for the toffs. The other irony is that half of those flats, which will sell for upwards of £1 million—probably, the higher one goes, more than £5 million—will be bought by foreigners. That is what happens when buildings are built alongside the river Thames. We have the extraordinary irony of the Deputy Prime Minister and Secretary of State for the Environment, at Mr Livingstone's behest, giving approval for such a development. It is a disgrace.
	I turn briefly to the consequence, which is very worrying. This establishes a precedent. Every developer in London will now be able to say, "It does not matter what an inquiry will say, we will put in for a very large tower block and the Secretary of State will support us". So we can have tower blocks in Richmond, Twickenham, Hampstead, Enfield, Bromley—absolutely anywhere. That is of course Mr Livingstone's dream. It is extremely worrying.
	I do not believe that the indiscriminate scattering of very tall buildings across the skyline can do anything other than cause visual harm. We as Londoners—or people who work and live in London—should all be concerned about the skyline of London, because once it is ruined it is gone forever. That could never happen in Paris, Rome, or Berlin. It just would not happen.
	As I said, I am not against tall buildings, but there must be an overall design landscape/skyscape for London. I hope that the London boroughs will take the advice of English Heritage. English Heritage was against the proposal. CABE was not against it, but CABE is a developer-friendly body. Its chairman has just resigned because he was a developer. It should restore its reputation as an independent body.
	English Heritage was against the proposal from the word go. English Heritage is rather like the House of Lords—it is a bit awkward; it goes against what the Government want. It strokes the cat the wrong way. I suppose that that is why about two months ago there was a rumour that the Government were going to fold up English Heritage. Did your Lordships see that in the Sunday Times? Within 24 hours the Government had to say that they had no intention whatever of doing so; that it was a rumour.
	English Heritage has said that what is needed for London is an urban design landscape. I urge the Minister, who does not have direct responsibility for this decision—I absolve him from that horrendous position—to try to engender in London, possibly through the Mayor and possibly through the Greater London Assembly, which should try to control the Mayor in some way, a regime that will not allow the scattering of large skyscrapers anywhere across London. That is the danger of what has happened and I hope that the debate will focus on it.
	This is the first debate in either House on a planning application before it has been made. It is a historic precedent. The Government did not want to have this debate because it opens the door to many other debates in both Houses, but the Clerks of the House rightly decided that it was not sub judice. So, in the future when proposals come forward at an early stage for such horrendous ruination of the skyline, I hope that both Houses will have a chance of alerting public opinion to that and to the grave damage that has been done at an early stage.

Lord St John of Fawsley: My Lords, I am sure that your Lordships are grateful to my noble friend Lord Baker of Dorking for having introduced this important subject at this moment—not only a timely moment; but as he said, a historic moment, because it is taking place before the dread planning decision is issued in its final form. However, I fear with him that it is unlikely to be deflected even by his eloquence, which we heard this evening.
	I was chairman of the Royal Fine Art Commission for 15 years. In those 15 years I had 15 different Secretaries of State. That had a great advantage because as soon as the reigning Secretary of State had mastered his brief he left and was required to go and pester someone else. That meant that one had a measure of de facto freedom that was most welcome.
	However, all the Secretaries of State, particularly my noble friend Lord Baker of Dorking, were extremely helpful and concerned with the aesthetic values that the Royal Fine Art Commission so coherently and courageously championed. I do not want to repeat my noble friend's points, but skylines and views are crucial in this argument. They are crucial in this case and will remain crucial in the future. We need to raise our voices at every possible opportunity.
	The planners have learned nothing about views. Ministers have learned little; certainly the Ministers of the present Government. We still lack a coherent policy on high buildings. Eight years ago the Royal Fine Art Commission published a report on tall buildings in London. I will not ask the Minister whether he has read it; or perhaps I might. Or perhaps it has been kept from him by his civil servants. But this contains the basis of a policy of high buildings in London, which has been ignored by successive governments.
	Views are all-important in this city. I am glad to say that the Royal Fine Art Commission of the day—when the then Conservative Government headed by Harold Macmillan was desperately searching for dollars and was pressing for the erection of the Hilton hotel—was the one body that opposed it. If you look at that building today, you can see that it ruins the proportions of the whole of Mayfair, which had one of the finest townscapes in the world. Wherever you go in Mayfair, if you raise your eyes from pavement level and are lucky enough not to fall into a pothole, and look—

Lord Baker of Dorking: My Lords, I hear thunder. Ominous!

Lord St John of Fawsley: My Lords, it is not ominous at all. It is a sign of heavenly support, and a signal that a telephone call is due—but I cannot delay your Lordships to make one at the moment. I shall make it immediately this discussion is finished.
	The other principle that the Royal Fine Art Commission laid down was that no high buildings should be placed around Hyde Park, because once one was built, another would follow, and so on. That is exactly what has happened. Basil Spence's barracks in Hyde Park ruined that park; in fact, he has the distinction of having ruined two parks, because of his Home Office building, which towers above St James's Park.
	If you go further round Hyde Park, what do you find—the Royal Lancaster Hotel, as it used to be known, a building of outstanding mediocrity, which is famous for only one thing. When the octogenarian Michael Foot, still happily and mercifully flourishing in Hampstead, arrived in a fainting condition at the door of that hotel, which should never have been built, they refused him entrance. It was shortly after then that they went out of business, which I regard as a very happy conclusion to a moralising tale.
	Unfortunately, the buildings have gone on. Take the Regalian building overlooking Kensington Palace. That was opposed by the Royal Fine Art Commission, but there it is—overshadowing another of London's most beautiful spots.
	I shall not linger over the London Eye. I believe that my views on the London Eye are probably known by one or two people. It was unanimously opposed by the Royal Fine Art Commission because we thought that it was totally unsuitable to have it overshadowing a world heritage site. That was the very point that was made by my noble friend in his opening speech—that a world heritage site is one to be respected. I have nothing against a London Eye in another position—but not here, towering over this world heritage site and ruining the view from the Horseguards Parade, destroying the proportions of St James's Park. The dying wish of the late Mr Welsh, who was such a distinguished chairman of the Royal Parks Agency, was that it should be stopped. Alas, it has gone on—and now we have the Vauxhall Tower to match it.
	Views and spaces are essential. We have still a low and medium skyline, punctuated by occasional high-rise buildings. I am pleased to say that thanks to the initiative of the governor of the Tower of London, a new space has been created so that for the first time for hundreds of years one is able to see the Tower of London as a whole, as it should be seen. The visitors' centre is tucked away quietly in the corner where it can do useful work and reduce queues and crowds, but the great achievement is the opening of that space. I am glad to say that the Royal Fine Art Commission Trust acknowledged that achievement in its "Buildings of the Year" awards this year.
	The Royal Fine Art Commission was swept away by this Government, abolished by a press release. That is a way of behaving that makes even the deprivation of the orthodox Archbishop of London by Constantinople, by fax, for the offence of coveting thrones seem liberal.
	The question that we must now ask, which my noble friend touched on, is how this monstrosity got to be built. Another point, besides views and spaces, is the quality of building. Nobody could look at that building for a moment, whether or not they had a tutored eye, without seeing what a horrible construction it is. Now I raise this question—and I want the Minister to reply to this question only, and ignore all the other things that I have said. The reason why that building got planning permission was that there is no independent body to pass judgment on it—and independence can get things done. The Royal Fine Art Commission put an end to the horrific proposal, supported by the big battalions, including the Secretary of State for Culture, Media and Sport at the time, and by the Speaker of the House of Commons, to put a kitsch statue of Sir Walter Ralegh right in front of St Margaret's Westminster—between St Margaret's and the Abbey. The only body to oppose it was the Royal Fine Art Commission.
	My noble friend mentioned Mr Livingstone in another context. Mr Livingstone may or may not have crushed developers, but I think that my learned friend has certainly crushed Mr Livingstone tonight. However, he may arise yet again.
	I said to the Commissioners, "I will go and give evidence", and I was given a classic Civil Service reply: "You, chairman, give evidence? That would be quite unsuitable". Unsuitable or not, I did. The Speaker sent the Chaplain of the House of Commons along. I am glad to say that, although the Fine Art Commission was abolished—in that extraordinary way—the posthumous triumph was there, because the appeal was allowed and that statue was swept away in potentia and, in Act II, swept away were all the notice boards that had been put up by the dean and chapter.
	There has been nobody with an independent judgment here. The Secretary of State has supported this tower. The Deputy Prime Minister has supported this tower. It has been supported by the body set up to succeed the Royal Fine Art Commission as a watchdog.
	I now come to my crucial question which I put to the Minister. When will CABE be given independent status? What is it? It is a creature of the department. It is a private company the shares of which are owned by the department, of which the Secretary of State has a golden share enabling him to determine the course of all its decisions. It is not independent. Having raised this matter on various occasions, we were promised that it would be given independence. The whole of the previous Parliament has gone by, and it is still not an independent body. When will it be so? When do the Government intend to take action on this matter?
	Meanwhile, we repeat our deep gratitude to my noble friend for having raised this very important question and for having enabled it to be thoroughly discussed in this House.

Baroness Hamwee: My Lords, I thank the noble Lord, Lord Baker, for introducing this debate on an important point. It is an important point, but I will try to resist as far as I can responding to comments on the inspector's report and the detail of the Secretary of State's response to it.
	It is important because it raises a point of principle: how far Parliament should respond, if at all, to a decision which in this case is not a decision of the Executive but a quasi-judicial decision. Although there is much in what the previous two speakers have said with which I agree, that is why I would ask the Minister to resist revisiting—I suppose that means revising or rescinding—the decision.
	Criteria are published by the Government for the Secretary of State to "recover jurisdiction", as it is called, and there are criteria for calling in decisions. Those are less precisely defined. The Library found for me a statement of government policy in answer to a Parliamentary Question. It was that the Secretary of State would,
	"not interfere with the jurisdiction of local planning authorities unless it is necessary to do so."
	I stress the word "necessary". What is necessary is clearly a matter of judgment.
	I share in a great deal of what has been said, but in my view it is important that these decisions are taken at the right level. They are taken in a quasi-judicial manner, though by political bodies. The issue has been raised of whether there should be a separate independent body to look at planning applications. We have that to an extent, of course, in the planning inspectorate.
	What we have now is an extra tier of government—a regional tier. Though I am no particular supporter of the current Mayor of London, I shall say a word or two about the importance of having a planning framework for decisions in London. I question whether it was right for Mr Livingstone to spend £96,000 on the appeal. When I, through the mechanism of a formal Question to the Mayor, asked about the cost of his attending MIPIM, the developers' conference in Cannes, the answer that I got back was that it was all right because the London Development Agency paid for it. That did not seem to be an answer.
	As politicians, we all strive for accountability and transparency, and so it is right to spell out the criteria on which decisions should be based. That is what we find—maybe not perfectly and maybe we disagree with all or parts of it—in the London plan which, with the Lambeth UDP, is now part of the development plan. I share the regret that Lambeth's view of the design of the tower did not prevail. Its comments in the decision on the design were firmly rooted in the London plan. It quoted policies in the plan and in its own deposited draft unitary development plan and it commented on the proposed tower not being of sufficiently high quality and the world-class, iconic—there is that word again—standard of architecture required in the location, in view of its inevitable prominence. That is rooted in adopted, progressing, or emerging—as the planners always say—documents. In the case of the London plan, it went through the long and sometimes tedious public inquiry.
	We may individually disagree with parts, but it is fair to say that in dealing with tall buildings the London plan included the issue of clusters. Much of what is being complained about is already in the planning framework, and it is often a matter of interpretation. The London Assembly, which I currently chair, would love to control the Mayor, as the invitation was issued earlier, but the legislation setting us up does not allow us to do that. The Mayor is currently consulting on the London view management framework.
	I am well aware that the noble Lords who have spoken, and perhaps also other noble Lords, will regard me as a philistine. I am not commenting on the particular design of the building, but it is very much a matter of taste. I am well aware of the views of the noble Lord, Lord St. John of Fawsley, on the London Eye. I differ from him there. I have come to accept that there is often no single correct view on those matters. It is essential to articulate the reasons for the view—forgive the pun—based on agreed criteria.
	I do not know on what technical basis the Government could revisit the decision, but I urge the Minister to decline the invitation, not just because of the merits but because the Secretary of State's decision was taken in a quasi-judicial manner. Although he is assisted in unscrambling some of the difficult issues of affordable housing, which we were left with, the matter is best left back with the local planning authority where it belongs. It looks like the outcome is the one that we all anticipate.
	The noble Lord, Lord Baker, said that Parliament should have a particular role regarding height. I agree that the height of buildings, the impact on views in London, and the impact on important areas of London are hugely important issues, but why only height? Many aspects of planning are hugely important, and one of those aspects is affordable housing. I am sorry that I have already taken slightly longer than I intended, but I will use this occasion to raise one related point, regarding the importance of so-called affordable, or social housing.
	I understand that in a recent case a judge determined that the value of market housing is diminished by its proximity to social housing. I have not given the Minister notice of this point, but I hope that the Government will consider it seriously. Clearly, much depends on the detail of that case. It would be unfortunate to find ourselves as a society going down the road to accepting that there is something undesirable about social housing.
	I cheer myself up by recalling that in the ward that I used to represent there was a wall between an area of private housing—blocks of flats quite tall for the area— and what at the time was a council estate. The private owners had insisted on the wall being erected at the time the council housing was built. They then decided it would be quite nice to have it down. It was the occupiers of the council housing who said they did not want to be in with "that lot", and that they would retain their own independence.

Lord Baker of Dorking: My Lords, before the noble Baroness sits down, I assure her that I have never considered her to be a philistine. As a member of the Greater London Assembly, will she remind us of the debate that took place in that assembly on this development? Was it ever discussed? Did the assembly ever debate its consequential effects on the London skyline? Who is controlling this in London? When the noble Baroness says that she does not like Parliament getting involved, if there is not a debate in the Greater London Assembly, where can there be one? Is this all done behind closed doors at the Department for Environment, Food and Rural Affairs?

Baroness Hamwee: My Lords, to answer the noble Lord briefly within the ten minutes, I think the debate should be in Lambeth.

Lord Baker of Dorking: My Lords, the Lambeth view has been totally disregarded.

Baroness Hanham: My Lords, I thank the noble Lord, Lord Baker of Dorking, who has raised a specific and important issue. It is not about this planning proposal alone, but about the whole question of the planning decision making process, particularly on major infrastructure proposals.
	I will be uninhibited—as the noble Baroness, Lady Hamwee, invited us to be—in discussing this application, although it falls within the parameters I want to address. As the noble Lord, Lord Baker, has said, in this instance the local planning authority decided to refuse an application. This is something that happens usually after studied consideration. As a serving member of a planning committee, I must declare that in Chelsea we also have a planning process on tower blocks being undertaken by the inspector. I had no part in that process, but it is another example of where towers are being proposed on the river.
	I know that planning proposals are weighed carefully, particularly when they are major applications, or ones which affect the wider community. I have no reason to believe that Lambeth's councillors and officers who progress such proposals are any different from any other councillors or officers in similar committees up and down the country and particularly in London. This application clearly fell within the unusual category: it was a major structure of a height well in excess of any building within miles, on the river frontage, and one likely to set a precedent for future development not only in the boundaries of Lambeth but for other developments along the river, on either side. As with other Members of this House, I have no knowledge of the discussions or considerations that took place, but it is clear that this application was rejected for at least one of these reasons, and that it was unwelcome in planning and development terms. The councillors of Lambeth were backed up by a planning inspector who also thought that this scheme was inappropriate in its position. One does not want to comment on the process because one does not know about it, but the conclusion we can draw from the inspector's report is that it was not a satisfactory development.
	However, the Secretary of State appears to be about to override both the borough and the inspector's decision, and to impose his own views. It is also well known, as the noble Lord, Lord Baker of Dorking, has said, that the Mayor of London has a penchant for high buildings. He seems to be impervious to their locations. It is rumoured that he rather hankers after a local Shanghai.
	The process, whose outcome has led to this debate, was discussed at considerable length during the consideration of the then planning Bill last year. It is the unsatisfactory position in which either a regional planning body dictates to the local authority, or the Secretary of State can second guess it. Either can then ignore or override the local or unitary development plans—in the interests of what or whom does not seem relevant.
	In passing, I remind the House that the application, if approved, does not necessarily guarantee that that developer will develop that land. There is no reason why it should. Many applications go forward by developers simply to state or lay down the dimensions of what will or will not be approved. The land then passes hands. That happens all the time in London and could happen in this case, although it may not.
	The outcome is also the consequence of a presumption in favour of development. In this case, it seems one that must at the least have been very controversial. As we have heard from the noble Lord, Lord Baker, the Secretary of State has indicated that he is minded to agree to the application in exchange for some more affordable housing. Affordable housing can and has to be negotiated whatever the development, and its provision is certainly an insufficient reason to justify the Government's blessing being given to a construction that had been opposed by the local authority and the planning inspector.
	If that attitude to enormously high-rise buildings is to be the norm, the brave new world of London is of great concern. I cannot make any comment on the merits of the architecture, but the City of London is now a patchwork of high-rise development. Some of it is iconic but there would have been more that, without considerable protest, might have altered treasured views, particularly of St Paul's and other areas that sit uncomfortably with their neighbours. In the main at least, that development has been carried out in the context of the City of London's plan. The same is true for the development in Docklands.
	Obviously Lambeth has no ambitions to follow suit but, if the Secretary of State gives approval to the development, Lambeth will have to absorb something that it considers alien to its environment. Localism is becoming the buzzword of local authorities having greater and wider discretion on many fronts. Perhaps it is time that that was extended to their having sole discretion over the developments that take place within their boundaries.
	The proposed tower is taller than Canary Wharf. Let us imagine standing here on this side of the river, looking across and down to a tower of more than 50 floors. First, the tower will look utterly ridiculous where it is. Secondly, the pressure to replicate it elsewhere within the borough of Lambeth will be very strong. The precedent will have been set by the Secretary of State, who will not particularly have to look at it, live in it or deal with the local people who do not want it.
	I am sure that the department's protocols will probably allow the Minister to say absolutely nothing about the matter, as the decision has not yet been made. However, I hope that he and officials, both in the Chamber and in the Office of the Deputy Prime Minister, will take careful note of what has been said and the concern expressed by most Members of the House who have spoken tonight. I hope that they will be less willing to endorse developments such as the one which has been raised tonight in this Chamber by the noble Lord, Lord Baker.
	I hope that this discussion will receive a wider audience. It deserves to. The Secretary of State's powers to set precedents such as this are very undesirable.

Lord Bassam of Brighton: My Lords, I thank the noble Lord, Lord Baker, for raising this issue. Of course, I instantly add the caveat that, because of the delicate position of the application, there is little that I can say about this specific case. I am sure that noble Lords will understand why.
	Noble Lords will have noticed that I am addressing the issue rather than the noble Baroness, Lady Andrews, who generally speaks as a Government Minister on planning matters in your Lordships' House. Given her role in deciding and determining cases, it was thought inappropriate for her to take part in a debate regarding a live case.
	As I have no part in the decision-making process, I offered myself up to respond to the debate this evening. I must make it clear that I have not discussed this case with the noble Baroness, Lady Andrews, or any other planning Minister, and nor can I in future.
	The reasons for the First Secretary of State being minded to grant planning permission for the development at Vauxhall Tower are set out in his letter of 31 March 2005, to which the noble Lord, Lord Baker, has referred. This states that the Secretary of State is minded to grant permission for the Vauxhall Tower proposal, but has asked for further information about the amount of affordable housing proposed before taking a final decision. Beyond saying that, I am afraid I cannot stray beyond the wording of the letter, or otherwise put a gloss on its content, as this might provide a ground of legal challenge to the validity of the decision when it is finally issued. I am sure that this is a point of propriety requirements related to planning matters that the noble Lord, Lord Baker, as a former Secretary of State, will be well aware of. However, I can say that no final decision on whether to grant planning permission has yet been taken.
	I should point out that this case has been through extensive public scrutiny. This culminated in the public inquiry held between 15 June and 9 July last year, the report of which, and the evidence presented to which, formed the basis of the Secretary of State's letter. Since the issuing of that letter, further representations have been received. These have been circulated to all interested parties—there are over 50—for further comment. These representations, and responses to them, will also be taken into account, in so far as they are relevant, in the making of the final decision.
	Without getting into the specifics of the case, I understand that the noble Lord, Lord Baker, is concerned that, if this development goes ahead, it will lead to a rash of similar developments across London. I draw your attention to paragraph 17 of the Secretary of State's letter, where he endorses paragraph 11.32 of the inspector's report, in which the inspector states:
	"Notwithstanding the points made in the previous paragraph, it is an important principle that each case is considered on its merits and, in this instance, I do not consider that there would be harm to the skyline from the distant viewpoints. Concern about the possibility of precedent would not be reason to reject the proposal".
	The plan-led planning system should prevent inappropriate developments of all types in all locations. Under the Planning and Compulsory Purchase Act 2004, the development plan in Greater London is the Mayor's spatial development strategy for Greater London—the London Plan—and the development plan documents that have been adopted or approved in relation to each area. Local planning authorities prepare local development documents, which, taken together with the London Plan, constitute the development plan for each area within Greater London.
	An application for planning permission must be made to the appropriate local planning authority. The authority may grant planning permission, or refuse it. If the authority grants permission subject to conditions, or refuses to grant permission, or fails to make its decision within a prescribed period resulting in a deemed refusal, then the applicant for permission may appeal to the Secretary of State.
	In considering any proposals for development, regard is to be had to the development plan, and decisions shall be made in accordance with the development plan unless other material considerations indicate otherwise. Each decision is made on its own merits and in the particular circumstances of the case.
	Since April 2002, the First Secretary of State has made decisions regarding six tall building developments in London. He refused permission for four such buildings and permitted two of them: Heron Tower and London Bridge Tower, which is known as the Shard of Glass. To my knowledge, these have not led to a glut of similar applications.
	The London Plan sets out a strategic planning policy framework for tall buildings and the protection of the built heritage in London.
	The London Plan does not advocate the indiscriminate scattering of buildings. It promotes tall buildings in appropriate locations provided that they meet its criteria. These include that the development of tall buildings should create attractive landmarks enhancing London's character, help to develop a coherent location for economic clusters of related activities and/or act as a catalyst for regeneration, and also be acceptable in terms of design and impact on their surroundings. Further, the London Plan requires tall buildings to be of the highest quality design.
	It is important to point out that there is also a broader national policy framework which is relevant to the consideration of proposals for tall buildings. Planning policy statement 1 (PPS1), Delivering Sustainable Development, already underlines the importance of securing high quality and inclusive design. The policy is clear. Design that fails to take the opportunities available for improving the character and quality of an area and the way it functions should not be accepted. This policy principle applies whether the development is a tall building or is low rise.
	Similarly, government policy acts to protect existing buildings of historic significance. Planning policy guidance 15 (PPG15) Planning and the Historic Environment sets out the policy relating to this.
	Government planning policy is to get the right development in the right place. Given their prominence, tall buildings should be of the highest quality of architecture and designed with full understanding of their likely impact on their immediate surroundings and the wider environment.
	In addition to the Government's policy, English Heritage and the Commission for Architecture and the Built Environment (or CABE) have published Guidance on Tall Buildings which local planning authorities should take into account in the design and location of tall buildings. The guidance sets out a number of criteria against which individual proposals for tall buildings should be evaluated. These include the effect on the whole existing environment, the relationship to context and the effect on the local environment. The guidance, when read together with the Government's planning policies and accompanying practice guidance such as "By Design", provides a substantial body of policy and advice relevant to the consideration of proposals for tall buildings.
	Much mention has been made of the Mayor of London. He is the strategic planning authority for London. It is for him to decide how he wishes to consider tall buildings. Each proposed development should be considered on its merits, with regard to the relevant policy framework. It is for local authorities to evaluate and respond to guidance locally. However, the planning system gives the recourse of appeal to the First Secretary of State, who may, in the individual circumstances of a case, form a different view to that of a local authority or any views expressed by the Mayor.
	London has a great legacy of historic buildings and sites. Some of these were strongly opposed when they were first considered. I well remember the outcry that greeted the proposals for the building formally known as 30 St Mary Axe in the City—more colloquially referred to as "the erotic Gherkin". Now, many commentators, more qualified to express an opinion than I, regard it as a building of great innovation and beauty. In October of last year it won the Royal Institute of British Architects (RIBA) Stirling Prize for the building making the greatest contribution to British architecture on a unanimous vote by the judges. It is widely considered to add greatly to the appearance of that part of the City.
	Similarly controversial—possibly even more so, and the noble Lord, Lord Baker, would know more about that than I—was the approval of 1, Canada Square. Now few would argue that it should not have been built. It remains London's only entry in the 200 tallest buildings in the world 14 years after its construction.
	London is not a high-rise city. In comparison with the major cities in the rest of the world, it has relatively few tall buildings. Again, and according to the most recent figures from Emporis, London has only six-tenths of the number of tall buildings of Istanbul in Turkey.
	This is not to advocate a policy of approval for tall buildings, but merely to reflect that the application of planning policies in London, and the tenet that each case must be decided in accordance with the development plan—unless material considerations indicate otherwise—and on its own merits, have led to it having a different character to other major cities. It is a vibrant mix of high rise and low rise, ancient and ultra-modern. The granting of permission for the Shard of Glass, the site for which is—

Lord St John of Fawsley: My Lords, I apologise for interrupting the Minister, but would he kindly leave time to answer my question on CABE?

Lord Bassam of Brighton: My Lords, to bring this back to the case at the centre of the debate, as I said earlier, the inspector in the Vauxhall Tower case wrote in his report that,
	"it is an important principle that each case is considered on its merits . . . Concern about the possibility of precedent would not be a reason to reject the proposal".
	I submit that the Vauxhall Tower decision, whatever it may be, whenever it is issued, will be made on the individual merits of the case, having proper regard to the development plan and other material considerations, including national, regional and planning body policies. On the matter that the noble Lord, Lord St John of Fawsley, raised with regard to CABE, it is best that I write to him on that.

Lord Baker of Dorking: My Lords, I thank the Minister for giving way and I appreciate the difficulty that he has been in. It is a difficult position, but it has given the House a chance to have a debate, which does not occur in the Greater London Assembly. I hope that this will be a precedent that we have an early debate on controversial planning matters well before they come to the final hour.

Charities Bill [HL]

House again in Committee.
	Clause 8 [The Charity Appeal Tribunal]:

Lord Hodgson of Astley Abbotts: moved Amendment No. 21:
	Page 8, line 23, at end insert—
	"( ) requiring the Tribunal to publish its decisions without unreasonable delay"

Lord Hodgson of Astley Abbotts: Amendment No. 21, which concerns Clause 8 and the Charity Appeal Tribunal, inserts into new Section 2B the requirement that the tribunal publishes its decisions. One of the major difficulties faced by charities in recent years is that, though the Charity Commission has to date been the main forum where developments in charity law practice have taken place, despite the best efforts of the commission, it has not in every case publicised the changes of law practice instituted by it.
	One such example concerns a landmark decision announced by the Charity Commission on 21 February 2005. The press release from the Government News Network, which is available at www.gnn.gov.uk, explained that the decision,
	"means that charities can now deliver public services which public authorities have a statutory duty to provide. As a result, both the Trafford Community Leisure Trust and the Wigan Leisure and Culture Trust have been registered as charities".
	It went on to explain:
	"This decision changes our previous approach that charities could not usually use charitable funds to pay for public services—which a public authority had a duty to provide—but could only supplement them. This was reconsidered when the two organisations asked us to review our original decision to reject their applications for charitable status . . . In the course of the review, the Commission also looked again at the extent to which existing charities may carry out public services. It is now for the charity's trustees to decide if they should contract with a public authority . . . The published decision sets out our full guidance for charities".
	This is a landmark case in charity law that has had significant ramifications for the third sector. The problem is that these published decisions that set out the full guidance were published, as mentioned, in February 2005. However, the decision that changed the law was made in April 2004, which was 10 months earlier. Charities need to be kept abreast of any change in charity law, particularly significant changes such as this. If the tribunal is to take on the official role of charity law implementer, rather than the quasi role that the commission now holds, it should be imperative for such decisions to be published as soon as they are made.
	If charity law is to develop consistently and transparently, it is important that the commission, the charities themselves and their advisers should be aware of tribunal decisions. With such information, the sector can be kept informed about, and in touch with, developments in charity law. It can also significantly benefit the commission by reducing the time that it has to spend advising and updating charities, as greater transparency on tribunal decisions should result in fewer queries being directed to it.
	We argue that it is dangerous to leave a loophole whereby it becomes possible for the tribunal either to delay publishing its decisions or not to publish them at all. As a major new institution in the charity field, there should be a statutory requirement for the tribunal to publish its decisions without delay. I beg to move.

Lord Bassam of Brighton: We debated this amendment in Grand Committee on 23 February, when I agreed to reflect further on what was said. Having done so, I remain—sadly, from the point of view of the noble Lord, Lord Hodgson of Astley Abbotts—of the view that there are merits in having some flexibility on the publication of the tribunal's decisions. It will be open for appellants to appeal to the Charity Appeal Tribunal on what I am sure Members of the Committee will agree are a wide range of issues, from the removal of a charity trustee to requiring a charity to change its name. There is already provision in the Bill for the Lord Chancellor to make rules about the recording and promulgation of decisions.
	As I probably said previously, in our view the amendment is unnecessary and if, as seems likely to be the case, it would prevent rules dispensing with the requirement to publish decisions in particular circumstances, it is, in the Government's view, unnecessarily restrictive. Tribunals, of which the Charity Appeal Tribunal will be one, usually make arrangements for the public pronouncement of their decisions as soon as possible in the interests of those involved, whether by giving their decisions orally or at a public hearing or by publishing them in writing. Such decisions, which usually include a summary of the facts and reasons on which the decision is based, are placed on tribunals' websites.
	The Government believe that it is right that tribunals should be able to exercise the power to exclude from public pronouncement or publishing particulars of any decision in special circumstances; for example, where publicity would prejudice the interests of justice. In those circumstances, it might be appropriate for tribunals to anonymise any decision, edit the text of any decision or decline to publish the whole or part of any decision. This is entirely in line with government policy on tribunal reforms and with the guidance laid down by the Council on Tribunals on drafting tribunal rules. This is the process envisaged for the Charity Appeal Tribunal. Of course, we endorse the general principle of transparency in these matters, but there may well be circumstances where sensitivities have to be very carefully thought through. That is why we think it more appropriate to approach the matter as we have.
	I hope that the noble Lord can accept that the Bill as drafted allows for the promulgation of decisions—very much as he envisages—but in view of what he has said, I ask him to withdraw his amendment.

Lord Hodgson of Astley Abbotts: I am grateful to the Minister and I am sorry that we have had to go over this ground again. On this side, we were not happy that the Lord Chancellor's rules—the mechanism governing promulgation or the need to promulgate—were a sufficient safeguard. That is why we gave the example—admittedly, it has to be from the Charity Commission rather than the tribunal because the tribunal does not exist yet—of the delay in publicising a pretty important case where there was no issue of confidentiality or prejudice to the interests of justice. That is also why the words "without unreasonable delay" were included—so that if there was a reason why it should not be done quickly, it could be held up for the time being.
	I accept the argument about prejudicing the interests of justice and the argument about confidentiality. On balance, we felt that those would be less important than transparency. However, we have probably sucked most of the juice out of this orange and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Phillips of Sudbury: moved Amendment No. 22:
	Page 9, line 17, at end insert—
	"( ) The Lord Chancellor may, after such consultations as he shall think fit, establish a suitors' fund to widen access to the Tribunal by assisting with payment of applicants' costs and make rules for the purpose."

Lord Phillips of Sudbury: Amendment No. 22 would insert in the 1993 Act via Clause 8 a permissive power on the part of the Lord Chancellor, after consultation, to establish a suitors' fund. The purpose would be to widen access to the Charity Appeal Tribunal by assisting with the payment of applicants' costs. The amendment would provide that the Lord Chancellor may make rules for the purpose in accordance with the provisions already in Clause 8.
	Some, and I am among them, think that the creation of the Charity Appeal Tribunal is arguably the most important single innovation in this measure. But it will be stillborn unless access to it is enabled. Access to the High Court, currently the only remedy outside the Charity Commission for an aggrieved would-be charity or charity, is not an accessible remedy. It has been a serious blot on the development of the common law definition of charity, for example, that the cost of access to the High Court being what it is, no one can afford to go there. I say no one—you may get one case every year or two, if you are lucky.
	It is no accident that the National Council for Voluntary Organisations has made this one of its two most important issues for amendment at this stage of the Bill. It is as much in touch with the voluntary sector in all its parts, particularly the smaller elements, as any organisation in the country. It knows as well as I do from long practice that unless there is some costs provision to enable the smaller charities in particular to have access, the tribunal will be seriously under-used, as against the need to use it and our hopes for it. Without some provision for assistance with legal fees—the amendment does not prescribe what that assistance might be or how it might be delivered—the tribunal will not achieve the purpose intended for it.
	It may be said that this will discourage lawyers making of the Charity Appeal Tribunal the sort of complex mess that some would say the employment tribunal has become and that if you keep the lawyers out, you keep common sense in. I dearly wish that were so, but charity law is as complex an area of law as any in our legal system. The issues that will go to the tribunal will, in the majority of cases, need lawyers to enable the applicant to have a chance of succeeding against the commission, because that is effectively what it will be. The commission will of course have access to its own legal staff; it can bring in and pay for outside barristerial help when it needs it. We will have unequal combat unless some provision is made for worthy cases where the applicant is unable to foot the bill.
	The Minister may say that this is a job for the Legal Services Commission. That is a long shot. Many of us have been saying for a long time that the Legal Services Commission should be doing a great deal more than it is vis-à-vis legal aid. I am afraid that legal aid is the great casualty of our welfare state. This is the place at least to have a longstop so that if the Government do not engage the Legal Services Commission in providing legal aid for these tribunal cases—and I do not think that they will because legal aid is not currently available for any charity case—then the Lord Chancellor can consult and establish a suitors' fund which will at least improve access. I would never expect it to be universal; I would always expect it to be of limited scope. But I cannot emphasise too strongly that without real access to it, the Charity Appeal Tribunal, which has huge merit, will be stillborn. With those sentiments in mind, I beg to move.

Lord Swinfen: Perhaps it would be for the convenience for the Committee if I spoke to Amendment No. 24, which is in my name, and which deals with the same subject. I am rather surprised that it was not grouped with the amendment of the noble Lord, Lord Phillips. I do not mind which of the two amendments the Government accept, but they should accept one of them.
	The noble Lord, Lord Phillips, being a lawyer, probably drafted his own amendment. I am fortunate in that I had another lawyer to draft mine. Not being a lawyer, I shall not try to judge between the two of them.
	During the discussion of the previous Charities Bill in Grand Committee, the amendment was opposed by the Minister—at col. GC 342 of the Grand Committee proceedings on 23 February—on the ground that it was unnecessary as the Government had decided to propose a tribunal to resolve uncertainty in charity law.
	The tribunal and the suitors' fund are not alternatives; they are complementary. The tribunal cannot set legal precedent any more than the commission, and there may be cases when the authority of the High Court is required. The charity sector has been bedevilled by uncertainty in charity law, the snail's pace at which it moves forward and the cost of taking cases to resolution in the High Court. It is often new charities without any money for lawyers that are at the boundaries of what is charitable and produce the applications which test charity law.
	If the Minister is right that there will be no applications to the court after the creation of the tribunal, the amendment will become merely academic and cost nothing. But if there are cases that need the authority of the High Court, the tribunal can access a small fund that will enable a charity with a public interest application to obtain an authoritative answer.
	I am happy to support the amendment of the noble Lord, Lord Phillips, and I am sure that he could support mine if we needed to get to it.

Lord Bassam of Brighton: I am grateful to the noble Lord, Lord Swinfen, for coupling his amendment with that of the noble Lord, Lord Phillips of Sudbury. My argument is the same so it is highly desirable to consider the two together.
	As both noble Lords said, we have discussed the issue before. That debate took place on 23 February this year. On that occasion I said:
	"We accept that there might be a small number of cases"—
	before the tribunal—
	"in which the issues are of clear public interest . . . where the issues are . . . complex . . . [and] the appellant might not have the resources to engage legal representation".—[Official Report, 23/2/05; col. GC 342.]
	I accept the point made by the noble Lord, Lord Phillips, that there will be occasions when that is highly desirable.
	The Attorney-General will be copied in to all tribunal cases, and we envisage that in such complex cases he might want to exercise his power to be a party to the proceedings and to argue them before the tribunal. That would relieve the appellant of much of the cost of engaging legal representation. In addition, the Legal Services Commission will be able to grant exceptional funding before the tribunal in certain cases. The common reason for granting exceptional funding is because of cases in the public interest or for what is effectively a test case.
	Given the existence of the Attorney-General's power to intervene and the ability of the Legal Services Commission to grant exceptional funding, the Government continue to believe that the case for a separate suitors' fund has not been made. It is for those reasons that we cannot support the noble Lord's amendment. I invite the noble Lord to withdraw the amendment.

Lord Swinfen: Before the Minister sits down, he said that the Attorney-General might be drawn into the proceedings. Am I right in thinking that the Attorney-General would have to act on behalf of the Charity Commission and would not necessarily act on behalf of the charity? He also said that the Attorney-General would bear part of the charity's costs if he was able to act on behalf of the charity. A very small charity may still not be able to cover the cost of legal proceedings, or even a small proportion of them. A large number of small charities working on small incomes with little or no capital at all could be wiped out completely by having to pay their own costs or a proportion of their costs in court.
	The Minister really ought to think again on the question of a suitor's fund. It may never be needed, in which case it will cost absolutely nothing.

Lord Phillips of Sudbury: I am grateful for the Minister's response. In fact, my amendment and that of the noble Lord, Lord Swinfen—Amendment No. 24—are different. His amendment applies to cases being taken to the High Court from the tribunal. My amendment applies to cases before the tribunal only. The Government have made a concession from earlier arguments by inserting proposed new Section 2D into Clause 8 of the Bill, which gives power for the Attorney-General to intervene in proceedings—whether at tribunal or High Court level, whether of his own volition or on the direction of the tribunal or the court. We have got somewhere.

Lord Bassam of Brighton: Perhaps I could make an intervention at this point to respond to the point made by the noble Lord, Lord Swinfen. The Attorney-General will be able to act in the public interest, which will, on occasion, be on behalf of charities, small or large. That answers the first of the points raised by the noble Lord, Lord Swinfen.
	The noble Lord's second point was that even small expenses may be beyond some small charities. I accept that. The Attorney-General will present cases at his own expense, so the consideration should not trouble us too much, but I accept the point that there may be difficulties for smaller charities. I hope that that answers his point.

Lord Swinfen: I hope that the noble Lord, Lord Phillips, will forgive me for a moment. The Attorney-General would, of course, have to be persuaded to take the case. It may well be that the charity needs to take the case and cannot persuade the Attorney-General.

Lord Bassam of Brighton: The point is that there is a public interest test. For that reason it would be desirable for the Attorney-General to be copied into all tribunal matters. Also, the office holder of Attorney-General is always alive to the public interest importance in such matters. I do not think that there is necessarily a difficulty to be considered.

Lord Phillips of Sudbury: That exchange does not take us anywhere with regard to my amendment. My amendment is addressed to tribunal cases and what I would call run-of-the-mill tribunal cases, not ones of great national or public importance, where I concede that concessions have been made in proposed new Section 2D. However, run-of-the-mill cases—in legal terms—are of the greatest possible importance to the applicant charity.
	I cast no aspersion or blame in this matter because there is no reason why the Minister or his officials should have any realisation of how hopelessly inhibiting it is for a charity to incur the legal costs necessary even to deal with a run-of-the-mill case before a tribunal. In the simplest of cases, for preparing a case and appearing before the tribunal, one is talking of a four-figure, sometimes a five-figure sum. These days it is not difficult to incur legal costs running into five figures. The kind of charities with which I am used to dealing have a severe dislike of incurring legal fees. That is about as far from their frontline purposes as one could imagine. Also, charities simply do not have the kind of reserves that enable them to put those sums at risk.
	I ask the Minister to reconsider this matter as I believe that there is an unreal understanding on the government Benches about the reality of the position that I am trying to describe. I would also be most grateful if he would drop me a line on the access to the Legal Services Commission for important cases. I am not aware of the authority that allows the Legal Services Commission to warrant the costs of an applicant in a case before this tribunal. As I say, hitherto, the general position has been that legal aid for legal proceedings was not available for charities. I would be most grateful if the Minister would enlighten me on at least that limited point.

Lord Swinfen: Perhaps the Minister would copy such a letter to me; I would be most grateful. When considering the costs that charities can afford, perhaps he would look at the income figures of charities which say what kind of accounting, auditing and reporting that they have to carry out. That will give him an idea of what the Government and the charity understand as the kind of incomes with which some small charities work.

Lord Bassam of Brighton: I shall more than happily share the correspondence with all those who have taken part in the debate and with the Opposition Front Bench. I shall take up the request of the noble Lord, Lord Phillips, to respond on the position of the Legal Services Commission.

Lord Phillips of Sudbury: I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Hodgson of Astley Abbotts: had given notice of his intention to move Amendment No. 23:
	Page 9, line 24, at end insert—
	"( ) In addition to the appeals and applications which may be made to the Tribunal pursuant to the provisions of Schedule 4 to this Act, the Attorney General or the Commission may of their own volition refer to the Tribunal such issues relating to the application of the charity law as they may consider should be reviewed and determined by the Tribunal."

Lord Hodgson of Astley Abbotts: Amendment No. 23 deals with an issue that we have already debated quite extensively. We believe it is important and I am grateful to the noble Lord, Lord Phillips, for putting his name to it. I am sure that he will add elegance and legal sophistication to my rather crude opening shot.
	The amendment inserts a new subsection into the proposed new Section 2B, entitled "Practice and procedure".

Lord Bassam of Brighton: In the interests of speeding up the proceedings, I am more than happy to take this amendment away for consideration. I want us to press on and we are happy to consider the amendment. We have debated it before and it may have been an oversight on our part that we did not wrap it up earlier. I apologise to the noble Lord, Lord Hodgson, for that.

Lord Hodgson of Astley Abbotts: If the Minister offers to take it away, he need not apologise. I gratefully accept that. I am just sorry we shall not hear the noble Lord, Lord Phillips, speak on it.

Lord Phillips of Sudbury: Judging by their effect, the few words of the noble Lord, Lord Hodgson, were of an eloquence that is rarely heard in the Chamber.

[Amendment No. 23 not moved.]
	[Amendment No. 24 not moved.]
	Clause 8 agreed to.

Lord Swinfen: moved Amendment No. 25:
	After Clause 8, insert the following new clause—
	:TITLE3:"CHAPTER 2A
	:TITLE3:THE CHARITY INDEPENDENT COMPLAINTS REVIEWER
	THE CHARITY INDEPENDENT COMPLAINTS REVIEWER
	After section 2 of the 1993 Act insert—
	"THE CHARITY INDEPENDENT COMPLAINTS REVIEWER
	2A THE CHARITY INDEPENDENT COMPLAINTS REVIEWER
	(1) There shall be a complaints reviewer to be known as the Charity Independent Complaints Reviewer (in this Act referred to as "the Reviewer").
	(2) The function of the Reviewer will be to investigate—
	(a) complaints of maladministration and of failure in quality of service by the Charity Commission, and
	(b) complaints of unfair, unreasonable or disproportionate conduct by the Charity Commission.
	(3) The Reviewer shall be appointed by the Secretary of State.
	(4) A complaint may be made to the Reviewer by or on behalf of any charity, charity trustee or other person or body who is or may be affected by the actions or decisions of the Charity Commission and there shall be no requirement that a complainant must use the Charity Commission's own complaints procedures first.
	(5) The Reviewer will not have authority to investigate and adjudicate—
	(a) complaints about the substance of legal decisions made by the Commission, although complaints about the way in which those decisions were made will be within the Reviewer's remit,
	(b) complaints by Commission employees concerning their employment or by applicants for employment about recruitment procedures,
	(c) complaints where legal proceedings before the Charities Appeal Tribunal or the court directly relating to the substance of the complaint have been initiated,
	(d) complaints relating to matters which are under current investigation by the police or taxation authorities, and
	(e) complaints under current investigation or which have earlier been the subject of a report by the Ombudsman but complaints which the Ombudsman has refused to consider may be reviewed.
	(6) The Commission shall co-operate with the Reviewer by permitting the Reviewer—
	(a) to inspect and take copies of all documents (including documents in electronic form) held by the Commission which the Reviewer considers relevant to the complaint, and
	(b) to interview employees or agents of the Commission.
	(7) The charity, the charity trustees and any receiver and manager appointed for the Charity shall also co-operate with the Reviewer by permitting the Reviewer—
	(a) to inspect and take copies of all documents (including documents in electronic form) held by it, him or them which the Reviewer considers relevant to the complaint,
	(b) to interview the charity trustees, the receiver and manager, their employees and agents and the employees and agents of the charity.
	(8) The Reviewer may send or not send any draft report to the Commission and the complainant but shall not send it to only one of them, and may—
	(a) dismiss a complaint,
	(b) make a finding that the complainant has acted frivolously, vexatiously or unreasonably,
	(c) require a complainant against whom such a finding has been made to pay the whole or part of the costs of the investigation,
	(d) make recommendations to the Commission regarding the manner in which it discharges its functions, or
	(e) make a finding of maladministration against the Commission.
	(9) In cases where the Reviewer has made a finding of maladministration against the Commission he may—
	(a) require the Commission to apologise to the complainant,
	(b) make an award of compensation against the Commission, or
	(c) make no award.
	(10) The Reviewer shall report annually in writing to the Secretary of State and may publish reports on individual cases unless he considers that there are good reasons not to do so.
	(11) The expenses of the Reviewer will be paid from money provided by Parliament.""

Lord Swinfen: The purpose of the amendment is to set on a statutory footing the position of the existing independent complaints reviewer who, at present, is appointed by the Charity Commission and to allow the reviewer to award compensation to a complainant for financial loss arising from any maladministration on the party of the Charity Commission. Together those changes will bring about a genuinely independent statutory alternative dispute resolution procedure which will provide, in addition to the tribunal and the High Court, a complementary route to access justice by charities trustees and others.
	The reason for the amendment is to create a truly independent mechanism for charities, trustees and others to be able to challenge the Charity Commission when it is apparently guilty of maladministration or is acting unfairly, unreasonably or disproportionately and to obtain financial compensation for maladministration and for financial loss.
	The Government have shown themselves unwilling to allow that role for the new tribunal. They have turned their back on arbitration. The Independent Complaints Reviewer is appointed by the Charity Commission on terms agreed with the commission. He can be removed by the commission and his recommendations set aside by the commission. It is important to public confidence that that alternative dispute resolution procedure is seen to be truly independent.
	At present, the Independent Complaints Reviewer may recommend awards for consolatory payments only. He may not recommend or award payment for financial or other substantive loss as a result of unfair, unreasonable or disproportionate behaviour by the Charity Commission. There seems to have been some misunderstanding of that point by the Minister, so I will quote from the terms of the independent charity complaints reviewer compensation policy document.
	In the introduction at paragraph 1.4 it states:
	"The ICR will treat all recommendations of compensation as being of a consolatory nature".
	At paragraph 1.5, it states:
	"The ICR can recommend maximum compensation of £5,000 in any individual case".
	In paragraph 2 under "Principles", it states:
	"The ICR is committed to the following principles with regard to payments of compensation".
	In sub-paragraph (ii), it states:
	"The ICR will not recommend compensation to recompense complainants for financial or any other form of substantive loss".
	In sub-paragraph (v) it states that,
	"compensation will be in the nature of a consolatory payment".
	That compensation policy makes it completely plain that the Independent Complaints Reviewer is prohibited from even recommending compensation for financial or other substantive loss. The Minister has previously stated in Grand Committee, that,
	"in appropriate circumstances, she could recommend that the commission consider this".—[Official Report, 23/2/05; col. GC 317.]
	The ICR's documentation from which I have just quoted makes it clear that the Minister's belief was misfounded. She cannot at present recommend compensation for financial loss. The sums of money that can be lost to charities, trustees and their beneficiaries by unfair, unreasonable or disproportionate behaviour by the Charity Commission can be substantial.
	One might argue that the courts are the proper place to seek award for financial loss for unreasonable, unfair or disproportionate behaviour by the commission, but such behaviour is usually challenged in the context of appealing against the commission's orders or schemes. In many of those cases the commission's or the court's permission is needed to bring such proceedings. That is grossly unfair when the heart of the issue is the commission's behaviour.
	When the case reaches the court the complainant will be faced with the Treasury Solicitor and the Attorney-General, acting not as defenders of charity but as defenders of the Charity Commission. Their presence ensures that the complainant, who is not eligible for legal aid, faces considerable costs if he loses, even if he represents himself. Furthermore, as illustrated in the Little Gidding case, the High Court identified the behaviour of the commission as a central issue at one hearing, but in later proceedings ruled that account need not be taken of whether the commission had acted fairly or reasonably in the making of its orders.
	The only redress in such a case is to go to the Parliamentary Ombudsman, but he has repeatedly refused to take up cases where there is still a legal scope for challenging the commission in the courts.
	Very few cases have reached the High Court since the 1992 Act, and in not a single case has the commission lost the substantive issue. When justice takes a long time to access, it is potentially bankrupting to the complainant and may be delivered with weighted scales; it is not justice. It is a denial of justice. It is that failure that creates the need for an effective alternative dispute resolution procedure to be in this Bill.
	In Grand Committee, the noble Lord, Lord Phillips of Sudbury, described the problem as,
	"an evil that needs redressing".
	He went on to say that the Charity Commission holds the view that,
	"the role of the Independent Complaints Reviewer should be amended",
	to give it,
	"more teeth and more powers to avoid compensation".—[Official Report, 14/3/05; cols. 449–50.]
	I do not consider it likely that the commission will be allowed by the Treasury to give the Independent Complaints Reviewer power to award substantial compensation for financial loss caused by the commission's occasional misbehaviour. It therefore follows that there must be a mechanism in the Bill if it is to deal with this evil.
	The Government may well oppose this clause because it has cost implications for the public purse. If any private citizen improperly harms another financially he can expect to pay. There is no reason why the Government's regulator should be in practice above the law. In practice, this clause would assist the new management of the commission to change the culture there, and we would see very few claims as a result.
	As the House knows, it is in the business of developing law which conforms to commonly held concepts of justice, knowing that otherwise it will rightly be despised by those whose actions the law is intended to confine. The courts and the Government support alternative dispute resolution procedures as a means of levelling the playing field between citizen and state. Without such a mechanism in this Bill, we may deliver law but we may not deliver justice. I beg to move.

Lord Phillips of Sudbury: The noble Lord, Lord Swinfen, has made a strong case for substantial reform to enable charities in rare cases to obtain the compensation to which, on any normal criteria, they are entitled. I believe that the present arrangements are highly defective, especially with the Parliamentary Ombudsman's inability to intervene unless High Court remedies have been exhausted. As I endeavoured to persuade the Government in an amendment that I moved recently, charities are extraordinarily loath to pursue remedies through the courts, not only because lawyers' fees are these days extremely high and demanding but because most boards of trustees feel that even when they have suffered a wrong, to risk substantial charity funds in pursuit of it is somehow against the spirit of their whole enterprise.
	I am entirely with the noble Lord, Lord Swinfen, and congratulate him on his persistence in this matter. He has ploughed quite a lonely furrow. As I have always said, I am not castigating the Charity Commission, which on the whole does a very good job in extremely difficult circumstances. But the fact that that is the case is no mandate whatever for present arrangements, which leave charities, in rare cases, with no effective remedy and very substantial losses.
	I shall listen with great interest to the remarks of the Minister in response to the amendment. It quite likely does not fit the Bill as well as one might like—and I can think of a number of aspects of it that I would wish to see changed. However, I hope that he will not dwell upon the inadequacies of the drafting but, rather, address himself to the underlying defect which really does need to be addressed—by the award of proper and not just consolatory compensation.

Lord Bassam of Brighton: I argue that there is already a statutory body which will investigate complaints of maladministration against the Charity Commission, and that is the Parliamentary Ombudsman. In my view, the statutory independent complaints reviewer proposed by this amendment is very similar to the ombudsman. For example, the proposed remit of the ICR is similar to that of the ombudsman.
	There are three main differences. First, the statutory ICR would be appointed by the Secretary of State whereas the ombudsman is appointed by the Queen on the recommendation of the Prime Minister. Whereas the proposed ICR would report annually to the Secretary of State, the ombudsman must report to Parliament. In this respect, I argue, the ombudsman's arrangements seem preferable to us, guaranteeing a greater degree of independence and accountability—something which noble Lords have argued for throughout the course of this Bill.
	Secondly, the proposed statutory ICR would be able to require the commission to apologise to the complainant. The ombudsman has the power to recommend that the commission make an apology where she finds that something has gone wrong. It seems to me that if the commission is required by a complaints investigator to make an apology, the value of the apology is somewhat reduced.
	The third main difference is that the proposed ICR may make an award of compensation against the commission, whereas the ombudsman can recommend that payment should be made for a financial loss or for the inconvenience or worry that the complainant has been caused. The ombudsman can recommend any level of compensation, if the complainant has evidence to show that he or she has experienced quantifiable financial loss directly as a result of the commission's maladministration.
	We should remember here that very few cases reach the ombudsman, and the commission will almost always accept her recommendations. If the commission did not accept a recommendation to pay compensation, the ombudsman would report the commission to the Select Committee on Public Administration. The ombudsman's powers have sufficient teeth in this respect, and we see no need to change the current complaints procedure in statute.
	In terms of the existing, non-statutory independent complaints reviewer there are a number of advantages in her non-statutory status. Changes are made by agreement and I think that it would be fairly acknowledged that there is a spirit of co-operation between the ICR and the commission. The process of going to the ICR is more informal than the ombudsman's process and complainants always have recourse to the ombudsman if they are dissatisfied.
	In summary, therefore, I cannot see any advantages in having a statutory independent complaints reviewer and, indeed, I think that there are a number of disadvantages, to which I have given voice. The present arrangements work well and, for those reasons, we cannot see that this amendment has any additional merit. I think that to have two statutory processes working in a similar way, without the authority that the ombudsman naturally carries, overly complicates the situation. The current informal and, on the other side, formal arrangements work quite well in tandem.

Lord Phillips of Sudbury: Before the Minister sits down, how does he answer what seemed to me to be the main point made by the noble Lord, Lord Swinfen: that the present arrangements for the Parliamentary Ombudsman are simply ineffectual, because the Parliamentary Ombudsman will not act until High Court remedies have been exhausted? In reality, remedies in the High Court against the Charity Commission, by their very nature let alone the fact that we are dealing with charities, are not pursued.

Lord Bassam of Brighton: I am thinking aloud here, but I wonder whether an ICR of a statutory nature would work any differently in that regard. Would they not also want to see the full legal process exhausted before giving consideration to the complaint in the way in which the noble Lord, Lord Swinfen, envisages? Perhaps it is best in those terms that the ICR is there in an informal capacity.

Lord Phillips of Sudbury: The noble Lord can answer his own amendment, but as he has drafted the amendment you do not have to go through the High Court, because that kills the purported remedy.

Lord Swinfen: I thank in particular the noble Lord, Lord Phillips, for his support. He said that he should like to see a number of aspects of the amendment changed. Perhaps we could meet to talk about that between now and the next stage of the Bill.
	As the noble Lord, Lord Phillips, pointed out in his second intervention, the Parliamentary Ombudsman will not act until all the procedures through the courts are completed. Small charities physically cannot afford that; they do not have the money. Therefore, justice will not be done, and it certainly will not be seen to be done.
	The noble Lord, Lord Bassam, said that there was co-operation between the independent complaints reviewer and the commission—of course there is. The independent complaints reviewer, as I said before, is appointed by the Charity Commission on terms agreed with the commission. The independent complaints reviewer can be removed by the commission, and his recommendations can be set aside by the commission. That just does not seem right.
	However, the noble Lord, Lord Bassam, gave a long and detailed response to the amendment. Therefore, as a matter of good manners, I shall withdraw the amendment now so that I have a further opportunity to study what he said. I am very likely to come back at the next stage, and I may even consider pressing it to a Division if the Minister is still as recalcitrant as he is this evening. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Schedule 3 agreed to.
	Schedule 4 [Appeals and applications to Charity Appeal Tribunal]:

Lord Hodgson of Astley Abbotts: moved Amendment No. 26:
	Page 85, line 29, leave out from beginning to end of line 11 on page 86 and insert—
	"1 (1) Except in the case of a reviewable matter as set out in paragraph 3, an appeal may be brought to the Tribunal against any decision, direction or order made or given by the Commission under this Act (including any decision not to give a direction, make an order or otherwise act under this Act.
	(2) Such an appeal may be brought by—
	(a) the Attorney General, or
	(b) any person from the following—
	(i) the persons who are or claim to be the charity trustees of the institution or who otherwise have control or management of the institution,
	(ii) (if a body corporate) the institution itself, and
	(iii) any other person who is or may be affected by the decision, direction or order (as the case may be).
	(3) In determining such an appeal the Tribunal—
	(a) shall consider afresh the decision, direction or order appealed against, and
	(b) may take into account evidence which was not available to the Commission.
	(4) The Tribunal may—
	(a) dismiss the appeal, or
	(b) if it allows the appeal, exercise any of the following powers—
	(i) quash the decision, direction or order (as the case may be), in whole or in part, and (if appropriate) remit the matter to the Commission,
	(ii) substitute for all or part of the decision, direction or order (as the case may be) such other decision, direction or order as could have been made or given by the Commission,
	(iii) give such direction to the Commission as it shall consider appropriate,
	(iv) substitute for all or part of any direction or order any other direction or order which could have been made by the Commission,
	(v) add to the decision, direction or order (as the case may be) anything which could have been contained in the original decision, direction or order."

Lord Hodgson of Astley Abbotts: The Minister will be aware that I have had Schedule 4 in my gun sights. I rise to speak to Amendments Nos. 26 to 31. The amendments seek to remove the current table under Schedule 4, which is a jolly long table at that, and reword the details of how appeals and applications can be made to the Charity Appeal Tribunal. The table provided in the Bill makes it clear which Charity Commission decisions will be subject to appeal, who will be able to submit an appeal in each case, and the powers of the tribunal in relation to those decisions.
	That is a clumsy, ineffective and wordy approach. The effect of the amendments taken as a whole is to open the tribunal to all appeals rather than to restrict the tribunal to appeals as listed in the current overly prescriptive format in the table under Schedule 4. The Strategy Unit report, Private Action, Public Benefit, in recommending the introduction of a tribunal, envisaged that it would, first, hear appeals against legal decisions of the commission (paragraph 7.79); and, secondly, be able to make determination in the case of delay or impasse in the commission's decision-making process (paragraph 7.8). The Charities Bill instead includes at present a right of appeal that is restricted to the specific decisions and orders of the commission. In being so specific in the Schedule 4 table, there is a danger of significant omission or inappropriate provision that may only be corrected by the order of the Secretary of State approved by each House of Parliament as in Schedule 4 paragraph 6. That is an inflexible model for a major new institution and decision-making procedure, and the right of appeal still does not extend to instances of delay or impasse.
	The noble Lord, Lord Bassam, explained at the previous Committee stage why the Government chose to specify each matter that is appealable to the tribunal. He said:
	"While it would have been possible to group some of the decisions together, we believe that it is simpler to list the decisions in the order in which they appear in the Charities Act 1993. In that way a lay person can quickly identify whether the decision they are concerned about falls within the jurisdiction of the tribunal and whether they are eligible to appeal. It is necessarily long and complicated in order to be effective".—[Official Report, 23/2/05; col. GC 345.]
	So it appears that the Minister believes that all the commission decisions that are listed under the 1993 act have been lifted and put into Schedule 4 of this Bill as decisions which can be appealed against. However, the Charity Law Association has pointed out that that is not the case by any means. It has already identified two examples: neither the provisions of Section 29 nor those of Section 33 of the 1993 Act had been listed in the table.
	Section 29 of the 1993 Act specifies that the commissioners may, on the written application of any charity trustee, give him or her their opinion or advice on any matter affecting the performance of his or her duties. This is an important consideration. If a charity wishes to do something which it is not positive is fully within the confines of charity law, it can write to the commission and receive advice which would make any actions the charity was subsequently to carry out bomb-proof. There is nothing in Schedule 4 that allows an appeal to be made to the tribunal against the commission for failing to provide advice.
	Similarly, with no reference to Section 33 of the 1993 Act, a charity cannot appeal against a decision of the commission which does not authorise the taking of charity proceedings. Nor, in either of these two cases, can the charity appeal against any lengthy delay in coming to a decision on either proceedings or providing advice. These are just two examples of how this prescriptive method of listing the commission decisions which could be subject to appeal is highly restrictive. Who knows what other similar lacunae may not appear after the Bill has become law?
	These amendments would solve this by establishing in its place a full general right of appeal, including a right to request the tribunal to make a determination in the event of undue delay on the part of the commission. This approach also has the desirable by-product of reducing the length of the Bill by some six pages—that is Amendment No. 31. I hope that all noble Lords who share my view of the desirability of reducing the volume of legislation will support these amendments. I beg to move.

Lord Phillips of Sudbury: I generally support this amendment and the group of which it is part. As the noble Lord, Lord Hodgson, said in moving the principal amendment, when this was put to the noble Lord, Lord Bassam, last time, the word that he used to describe the Government's approach was, I think, "simpler". On reflection, I do not agree. I accept that in some circumstances it can be simpler for the user to have matters set out precisely rather than under general headings, but I do not think this is such a case. One would be saving how many pages?

Lord Hodgson of Astley Abbotts: Six.

Lord Phillips of Sudbury: The fact that one would be saving six pages gives the lie to the notion that the Government's approach is more user friendly.
	I also applaud the fact that a right of appeal would be given under these amendments for unreasonable delay on the part of the commission. I moved an amendment to that effect separately at the previous Committee stage, and I think that it is worthy of a place in this part of the Bill. Unless there are some aspects to the debate that have so far avoided me, I am certainly inclined to support what the noble Lord, Lord Hodgson, proposes.

Lord Bassam of Brighton: We debated the amendment on 23 February. Thinking back, I think that we must have debated a lot on 23 February; we have had a lot of references to it today. I shall pretty much repeat what I said then, word for word. I am sorry that that is the case, but I cannot see that things have changed at all since.
	The Charity Appeal Tribunal will provide a less formal means of challenging the decisions of the Charity Commission than pursuing a case in the High Court. That is accepted. It is intended that appellants would be able to represent themselves in person should they wish to do so, although the noble Lord, Lord Phillips, thinks that there will be instances where it is necessary for them to employ lawyers to do the work of the charity.
	As I said before, the table in Schedule 4 is not only simpler but clearer about which Charity Commission decisions would be subject to appeal, who would be able to submit an appeal in each case, and the powers of the tribunal in relation to those decisions. We decided on a course of action that sets out how we feel that the mechanism will work, rather than leaving it open-ended. We think it best that way.
	Members of the Committee are right that it would have been possible to group some of the decisions together, but we think that the table, with the decisions listed in the order in which they appear in the Charities Act 1993, is clearer than the proposed amendments. It will provide the opportunity for a lay person to identify whether the decision about which they are concerned falls within the jurisdiction of the tribunal.

Lord Hodgson of Astley Abbotts: There is something that I do not think that the Minister has tackled so far. The Charity Law Association has identified two legitimate bases for appeal to the tribunal that will not be allowed because they are not included in the list. None of us is confident that those are the last two that will be found. They were Sections 29 and 33 appeals, which are not appealable at present. The Charity Law Association believes that they should be. The Minister's comment that the 1993 Act's appealable provisions have all been lifted wholesale has not been fulfilled. I do not say that he gave the undertaking in anything other than good faith, but we need to address the issue.

Lord Bassam of Brighton: I shall try to address those two points. I want to make it clear to Members of the Committee that the position as we have set it out is better than the proposed amendments, because it will enable the lay person more quickly and readily to identify whether the decision about which they are concerned falls within the relevant jurisdiction and whether they are eligible to appeal.

Lord Phillips of Sudbury: I realise that the Minister is working his way through the argument, but I simply do not understand that it is simpler for the lay man to wade through six pages of schedules with three columns in them than to give the lay man, trustee or charity a general right of appeal against the decision, direction or order emanating from the Charity Commission. How can it be simpler? Seriously, that is counterintuitive—it is counter to common sense.

Lord Bassam of Brighton: It is like this—

Noble Lords: Oh!

Lord Bassam of Brighton: Judgment has already been passed, I fear. If you have, set out in terms, the situation in which you can appeal, the way in which that appeal will work and how you can make that appeal, that is plain and not vague—not undescribed or amorphous in its scope. The noble Lord, Lord Hodgson, makes a fair point—

Lord Phillips of Sudbury: I am sorry, but this is so important. How is it vague in scope to say that you have a general right of appeal against any decision, direction or order? That is not vague.

Lord Bassam of Brighton: The noble Lord was referring to a general ability to appeal. What does that then cover? How does the lay person understand what that general right is?

Lord Phillips of Sudbury: If it affects any decision, direction or order of the Charity Commission.

Lord Bassam of Brighton: I would have thought that the lay person would like to have some sort of steer on how that works. That is what our approach effectively provides.
	The noble Lord, Lord Hodgson of Astley Abbotts, provided us with the examples of the Charity Law Association. With Section 29, on the question of advice, it is not appropriate to appeal to tribunal. The commission would give authority, if appropriate, for directions to be given by the court.
	As to Section 33, any refusal of a certificate to take charity proceedings is already, in any event, subject to review by the court, which is the appropriate body to determine that matter.
	As for things which have not yet been thought of as relevant, and are perhaps unlisted, there is the facility to add to the list by virtue of paragraph 6 on page 95. So there is that element of flexibility.
	On balance, we prefer our approach of describing, setting out and showing what the appeal right covers for the lay person. I accept the point that it is there, and at length. The lay person, however, would at least have the opportunity to see quite plainly what it is that they are unable to appeal against, and how the appeal process works.

Lord Hodgson of Astley Abbotts: The Minister has made a gallant attempt in the face of some powerful arguments. I am afraid I do not find his argument persuasive, however. While I am all for our trying to make this Bill comprehensible, the thought that I, as a charity trustee, am going to go off and read between pages 88 to 94 without a lawyer, work out where I am, what clause I can appeal under and who may actually make the appeal, flies in the face of common sense. If I may borrow the phrase of the noble Lord, Lord Phillips of Sudbury, the Government's approach is counter-intuitive.
	The hour is late, I will not belabour the luckless Minister, who has had no dinner, any longer. I reserve the right to come back to this one. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendments Nos. 27 to 31 not moved.]
	Schedule 4 agreed to.
	Clause 9 [Registration of charities]:

Lord Hodgson of Astley Abbotts: moved Amendment No. 32:
	Page 11, line 37, leave out "£5,000" and insert "£10,000"

Lord Hodgson of Astley Abbotts: My Lords, we come to the first of a series of amendments we have tabled which seek to reduce the regulatory burden for both charities and the Charity Commission, and to make the framework of charity law more easily comprehensible by charity trustees.
	This amendment seeks to raise the level at which a charity must register with the commission, from £5,000 to £10,000 per annum.
	I want the Committee to note that I use the word "must" not "may". This was not the case in the original Bill. There, the Charity Commission could refuse to register a charity if its annual income was below £5,000. This was clearly wrong. If a charity, any charity, wants to register with the Charity Commission, it should be able to do so. We tabled amendments to ensure that this would happen by changing "may" to "must" in line 25 on page 12 of the Bill. We were extremely grateful to the Government for accepting that amendment.
	There are many reasons why even the smallest charity might want to be registered—notably that many grant-giving charities and local authorities will give grants only to charities that are registered. But why should small charities have to register? Equally important, what risk is there if they do not? At an annual income of £5,000, a charity will have total assets of just over £100,000, if they are all invested at the current benchmark gilt rate. That is a ludicrously small sum at which to require a charity to be registered. No one can argue that such charities present any systemic risk to the charitable sector or public confidence in charities generally.
	So, for once, let us take a positive step to lift the regulatory burden. In Grand Committee, I argued that the minimum threshold should be lifted to £25,000. I accept that that did not find favour with the Committee, but the noble Lord, Lord Shutt of Greetland, whom I am now sorry to see in his place, said that he would be tempted to support a figure of £10,000. So here is temptation. I beg to move.

Lord Swinfen: I support my noble friend's amendment. He said that a charity would need gross assets of £100,000. That may be the case. It would be the case with a grant-making charity that was going to give £10,000 away to other charities. But very small charities with an income of £10,000 can be doing a lot of good work. They may not want to register. They may have no need to register if all their income is coming from local sources who know and approve of what they are doing and support them. However, if they are working on a bigger scale and need to get their money from the grant-making trusts, they will need to register—and will register of their own volition because the majority of grant-making trusts will not give to charities unless they are registered.
	So my noble friend is granting relief to those small, local charities, supported by local people, that do not need to register. I fully support him on the figure.

Lord Phillips of Sudbury: I hate to break ranks on this, but I am not entirely persuaded about increasing the figure for registrations from £5,000 to £10,000. Registration is rather different from some of the other limits—for audits and so on. I think that we all said at different points during our debates in February and March that maintaining the probity of the sector was an overriding demand or requirement, because loss of public faith in charity is infectious and one of the great glories of the system at present is that the word "charity" still resonates extremely positively almost everywhere.
	Given the simplicity of the reporting and accounting regime for charities with an income of, let us say, £5,000 a year, I do not see why one should raise that threshold by 100 per cent, or at all. As the noble Lord, Lord Hodgson, said, a charity with an income of £5,000 can have capital of £100,000. That may be small fry compared with Oxfam or Save the Children, but it is a lot of money for a small, local charity. Sometimes, slapdash and, occasionally, worse than slapdash, conduct can almost be encouraged by the sense that they are outside the regulatory net—they are not even registered as a charity. These days, it is not a great hassle to get registered—unless you have unusual objects—and it is not a hassle, once registered, if you are small, to keep the show on the road. So I must confess that I am not persuaded—I am persuadable but not persuaded.

Lord Bassam of Brighton: Just as the noble Lord, Lord Phillips, was getting to his feet, temptation in the form of the noble Lord, Lord Shutt, had just come through the door. What he will make of this debate, I do not know, having thought about it before.
	The proposition made by the noble Lord, Lord Hodgson, that the current threshold be lifted from £5,000 to £10,000 is of course a cunning one because that is the level at which the Strategy Unit made its recommendations in its report—a well chosen threshold indeed. We simply propose £5,000, with the option of registering under that threshold. The majority of evidence submitted to the Joint Committee indicated support for that approach; in fact the Joint Committee's report mentions evidence from only one charity which supported a threshold of £10,000.
	During the last series of debates on this I mentioned that raising the threshold would remove a large number of charities from the commission's scrutiny. This was the point made by the noble Lord, Lord Phillips: the guarantee—or near guarantee—of probity that comes with that and how that may prove to be a disbenefit to charities if they are removed from the obligation. I also said that the regulatory impact on small charities is not onerous—a point supported by the noble Lord, Lord Phillips—and I think that is true. It was true then and is true now.
	We can see that there is some merit in raising the threshold to £10,000. But it is not a step we should take without there being full consultation because the figures in the Bill have been consulted on and there has been a broad measure of agreement on them and it would be wrong of us to break that. The Government plan to do a review of all of the thresholds which charities are subject to a year after Royal Assent. That would be a more appropriate time in which to conduct a further consultation as time will have passed. This figure will certainly be included in that review but I would not want to single out one financial threshold in the Bill for change at this stage.
	I hope that this is a helpful contribution to the debate. I respect the point that the noble Lord, Lord Swinfen, makes about regulatory burdens but I think in this instance there is more of a benefit in this threshold than a disbenefit and the option is there for us later, after the passage of the legislation, to review the figure and come to a fresh conclusion if that is required.

Lord Shutt of Greetland: I am tempted. The reason why I am tempted is because of other experiences with thresholds. I asked a question in your Lordship's House almost 18 months ago now about intestacy rules—it is an entirely different subject. Eventually a paper will be produced; there will be a long consultation period and it was even suggested that there might be a gap before the figures come in. It is a long time from the period when I raised the issue, but there was a problem with intestacy rules for about eight or nine years prior to that.
	What worries me about any form of threshold is that they seem to hang around for too long. I hear the point about it being reviewed a year after we get an Act. I think it would be a good thing if the threshold levels are constantly under review every three or five years, or something like that. The problem with thresholds is that they just seem to hang around for too long and become out of date.

Lord Swinfen: The noble Lord, Lord Shutt, is quite right. The threshold gets worn and as it is walked over it becomes shallower; time will do the same with this. Listening to the debate, we have got the question of a small charity that struggles to raise an income of £10,000 locally, but with nothing in the way of capital. We have also got the charity that has an income of £10,000 from what in my book is a substantial sum of capital—£100,000. It may not be substantial to some people but to me it is very substantial.
	I wonder if we can work something out on the income threshold combined with the capital, so that those with a large sum of capital have to register. If they have capital assets of £100,000 they would have to register but you would not have to register until your income was £10,000 if you had no assets at all. I am not asking the Minister to give any sort of decision tonight because this has been thrown at him in the dark from behind, so to speak, and he will need time to think about it.

Lord Bassam of Brighton: My response to the noble Lord, Lord Swinfen, is much as it will be to the noble Lord, Lord Shutt. We have got a fair consensus and measure of agreement about where those thresholds should fall, which is why they have been built into the legislation and framed in the way in which they are. We have given a clear commitment to a review of the thresholds a year after the legislation is put in place.
	That is the time, I suggest, that the points made by the noble Lord, Lord Swinfen, should be properly considered as part of a review. It is also the time when it may be right and appropriate to take a fresh view of thresholds. I have quite a measure of sympathy with the point made by the noble Lord, Lord Shutt. A lot of those thresholds hang around for a long time. Matters of self interest, such as councillors' expenses and so forth, never seem to catch up with inflation. But the noble Lord made the point better than I am.
	My answer is that we should stick with what has been agreed. Where there is a consensus let us have a review; let us conduct it more broadly perhaps than we are thinking today; and let us stick to the timetable that we have set out for the review vis-à-vis the legislation.

Lord Hodgson of Astley Abbotts: I thank my noble friend Lord Swinfen for his support and for his interesting suggestion that he made in his intervention towards the end of our short debate. I also thank the noble Lord, Lord Shutt of Greetland, who made the point that, by their very nature, threshold levels are always behind events and always will be. I am disappointed that I have not been able to persuade the noble Lord, Lord Phillips. I never thought that there was much of nursie about the noble Lord, Lord Phillips. I always thought of a freer spirit than that.
	We need to do something to trust our fellow trustees of smaller charities. While, obviously, we have a review in 12 months, I am tempted to think that tomorrow never comes. The review will be closer to events, but it will still be a bit behind schedule. Then there will be a longer period before we are able to review it again. My feeling is that, as is so often the case, we talk in this House about wishing to reduce the regulatory burden, but when it comes to taking that vital step to do something, we shy away from it, which is a shame. I do not propose to take this matter any further today. I therefore beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 9 agreed to.
	Clause 10 agreed to.
	Clause 11 [Changes in exempt charities]:

Lord Craig of Radley: moved Amendment No. 33:
	Page 14, line 20, at end insert—
	"( ) After paragraph (a) insert—
	"(aa) a charity wholly or mainly concerned with the advancement of the effectiveness and welfare of any of the armed forces of the Crown;"."

Lord Craig of Radley: In moving Amendment No. 33, I thank the noble Lord, Lord Hodgson of Astley Abbotts, for adding his name to it. I will not be long as the hour is late. Noble Lords will have noted that the Government have revised their approach to exempt charity status since the earlier Bill. I welcome that and would like to see all SNPF-type charities grouped in an exempt category.
	I have three reasons for putting this forward; namely, the complexities that the services will face because charity is a devolved issue; the extra costs; and the additional bureaucracy that SNPFs—initially the 2,000 or so with annual incomes of more than £100,000, but, ultimately, all those with limited incomes of perhaps £5,000 per annum—will have to face.
	The new Charities and Trustee Investment (Scotland) Bill is complete and is due to receive Royal Assent next month. That Act will not require SNPFs to be registered with the Office of the Scottish Charity Regulator at all, regardless of size. I first thought that it would be perhaps a simple process to propose a parallel amendment to this Bill to achieve the same end for SNPFs in England and Wales.
	However, the Scottish Bill's approach is to register any organisation established in or controlled from Scotland which the Inland Revenue has already recognised as a charity under current legislation. There will thus be two categories of charitable SNPFs in Scotland. Thanks to the Act, those on the Inland Revenue books will have the statutory right to deregister immediately, whereas those, presumably smaller, ones that have not had dealings with the Inland Revenue will not be automatically registered.
	The effect will be that all Scottish-based SNPFs may be treated the same and not burdened with additional cost or bureaucracy. Their accounts and audits will still, of course, have to be carried out by the service authorities. Alongside these, in England and Wales, there will be three further categories within the services—those above the £100,000 or reducing threshold; those below that cut-off; and a further group of SNPFs known as military Crown charities.
	The Armed Forces will face a complicated mix of legislation and registration requirements unless Her Majesty's Government are prepared to take account of the Scottish legislation and agree to treat English and Welsh SNPFs in a similar way to those originating in Scotland—in effect, not requiring them to register with the Charity Commission.
	A further point arises from subsection (14), which gives the Secretary of State the power to mitigate the risk of dual accounting requirements. Even if the SNPFs do not register with the Charity Commission, they will still have to account to their own services. If they do register, they will in effect have a double accounting regime.
	One solution within the structure of the Bill would be to put all service SNPFs originating in England and Wales into an exempt category. That is the purpose of my amendment. I beg to move.

Lord Hodgson of Astley Abbotts: My name is attached to the amendment and I am delighted to be able to support the noble and gallant Lord. We have been through the arguments extensively in the previous Committee stage of the Bill, so I shall be extraordinarily brief.
	Too often the Government have failed to distinguish between external and internal service charities—that is, between the Poppy Day appeal and an internal regimental charity. Internal service charities are a different category because they do not interface with the public. That interface is the main area of concern in the Bill.
	I recognise that the Government opened the door to SNPFs in accepting our amendments to Clause 11(12), which now permits the Secretary of State to add to categories of exempted charities in the future, not just to delete them, as originally proposed. I thank the Government for that change.
	Given the special nature of the internal service charities, there is no down side or danger to the sector as a whole in making the change now and accepting the noble and gallant Lord's amendment.

Lord Phillips of Sudbury: I, too, support the amendment. There is no issue of public probity or trust here. These are special charities that are well run. As the noble Lord, Lord Hodgson, has said, they are internal service charities. I very much hope that the Government accept the amendment.

Lord Bassam of Brighton: The Government have included a power in the Bill under Clause 11(12)(b) allowing my right honourable friend the Home Secretary to make an order giving exempt status to charities which are not currently exempt.
	The Government's current policy is that no new classes of charities—the charitable service non-public funds would count as a new class—should be converted from registered or accepted charities into exempt charities. That policy is in the interests of accountability and transparency. The power I mentioned is needed because there is at least one class of charities—the higher education institutions—within which the majority are already exempt but a minority are not. The power will be used to put the minority on the same exempt footing as the majority—a matter of common sense.
	The power could, however, be used to exempt an entire new class of charity should the Government's policy change in future. However, I should make it clear that there is no immediate prospect of a change in policy.
	Charitable service non-public funds are excepted charities at present. Excepted charities do not have to register or submit accounts but are otherwise within the Charity Commission's regulatory jurisdiction. Clause 9 will require excepted charities with income over £100,000 to register with the commission. Of the 15,000 or so SNPFs in existence, that would, in rough terms, catch the largest 1,500, leaving the remaining 13,500 to continue as they are at present.
	The £100,000 threshold can be lowered by statutory instrument, but there is now a provision—subsection (8) of new Section 3A—to prevent it being lowered before a five-year review of the operation of the Act has been reported to Parliament. So 90 per cent of SNPFs are protected from any prospect of being required to register within at least the next five years. Even for the 10 per cent that are required to register, the process of registration and the year-to-year requirements consequent on registration will be genuinely minimal in the extra work that might fall on those who administer SNPFs.
	The main challenge for SNPFs is to bring their accounting procedures into line with the Statement of Recommended Practice. That is something which the three services accept must happen and which they have been working on for some time with the Charity Commission. I can report that excellent progress is being made.
	Changing the status of SNPFs from excepted to exempt will not alter their position under SORP. SORP applies to all charities, whether registered excepted or exempt. Making SNPFs exempt will not help them at all in that regard.
	Perhaps the main question to be answered if SNPFs were to have exempt status is who would regulate them. Exempting them would take them out of the Charity Commission's remit. Under the Bill's arrangements for exempt charities in Clause 13, a new "principal regulator" would have to be prescribed for them by the Home Secretary. The principal regulator would also have to be given, by regulations, the objective of promoting compliance by SNPFs with charity law.
	It seems perverse to take SNPFs out of the hands of the Charity Commission—a regulator which is fully equipped for regulating charities—and place them under the oversight of an as yet unidentified alternative regulator—the MoD being the most obvious candidate—which almost certainly has no experience of regulating for charity law compliance. That seems like an administrative nightmare for the new principal regulator. And it is not offset by anything like comparable reductions in bureaucracy for the SNPFs themselves.
	To sum up, I can see no material advantage for anyone in making SNPFs exempt charities. Again, the Armed Forces have been consulted, and I should say that the Ministry of Defence is content with the Bill as drafted.
	I am grateful to the noble and gallant Lord for bringing his amendment before your Lordships' House. It has provided me with the opportunity of explaining in some detail and depth our approach to these matters and why we have what might be described as a principled opposition to the position advocated by the noble and gallant Lord.

Lord Craig of Radley: I thank the Minister for what he has said and the other two noble Lords who spoke. The Minister did not address one of my concerns, which is that in Scotland quite a large number of service non-public funds will not have to register at all. The mix of registration rules is very unsatisfactory from the service point of view.

Lord Bassam of Brighton: I have a response for the noble and gallant Lord. The charity base in Scotland, as he says, does not have to register with the Office of the Scottish Charity Regulator. If it chooses not to register it cannot call itself a charity, although it still gets the tax relief. It still has to comply with charity accounting rules, which is the case for charities in Scotland generally. SNPFs, it can be fairly argued, have no special treatment in the new Scottish law. I hope that that explains the position in Scotland.

Lord Craig of Radley: I thank the Minister. As the clock is pointed to 10, this is the moment to say that I shall carefully read and consider what he has said. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clauses 11 and 12 agreed to.
	Schedule 5 agreed to.
	Clauses 13 to 17 agreed to.
	Clause 18 [Cy-près schemes]:

Lord Phillips of Sudbury: moved Amendment No. 34:
	Page 18, line 37, leave out from "effective" to end of line 38.

Lord Phillips of Sudbury: I think that I can dispose of this amendment quickly. It is a variation on one that was debated last February. The cy-près clause, introduced by Clause 18 to the 1993 Act, sets out the basis on which the Charity Commission or the court can make a scheme. It details the matters that they must take into account in drawing up a cy-près scheme. It is to the third of those matters, as specified in subsection (3), that my amendment relates.
	The first refers to
	"the spirit of the original gift".
	The second refers to the desirability of making sure that the original purposes are close to the new ones. The third—subsection (3)(c)—refers to,
	"the need for the relevant charity to have purposes which are suitable and effective in the light of current social and economic circumstances".
	My amendment would strike out those last words so that it would read,
	"the need for the relevant charity to have purposes which are suitable and effective".
	The reason why I and others object to the words,
	"in the light of current social and economic circumstances",
	are that they are prescriptive. They do not cover the circumstances of a cultural or sporting charity, or an archaeological or religious charity. Those words are not appropriate to those sort of charities and many others. On reflection, it seemed to me that those words added nothing at all. All that the Charity Commission or court need to be satisfied about is that the relevant charity has purposes that are suitable and effective. We need qualify that no further, any more than
	"the spirit of the original gift"
	needs to be qualified. It is clear enough what it means. The amendment is a small but significant improvement to the Bill, which I hope commends itself to the Government. I beg to move.

Lord Hodgson of Astley Abbotts: I say briefly that we on these Benches support the amendment. We discussed the inappropriate nature of the words,
	"current social and economic circumstances",
	several times in the earlier Committee, and I hope that the Government will see fit to accept the amendment.

Lord Bassam of Brighton: Noble Lords are right; we discussed and debated this issue back on 14 March at col. 419. At that time the Bill required the commission when making a cy-près scheme to have regard for the need for charities to make a significant social or economic impact.
	As has been said, several noble Lords spoke against the concept and we have listened to those arguments. As a result, we have amended the Bill. In the Bill that we have introduced this Session, one of the matters to which the commission must have regard when making a cy-près scheme is,
	"the need for the relevant charity to have purposes which are suitable and effective in the light of current social and economic circumstances".
	We believe that that is more flexible than the previous wording. The requirement is in terms of the new purposes being "suitable and effective", which is wording already used in the Charities Act 1993 in relation to cy-près schemes.
	The commission is simply required to take into account the current social and economic circumstances when considering whether proposed new purposes will be suitable and effective. That would allow the commission to be more accommodating to the differences between charities. It requires the commission to consider the circumstances of the present day when making a scheme to take the charity forward, without requiring the charity to be able to make a significant social and economic impact. I do not see that a requirement for the commission to assess whether purposes will be suitable and effective,
	"in the light of current circumstances",
	could be problematic.
	The noble Lords, Lord Phillips and Lord Hodgson, may not entirely agree with where we have moved on this issue, but we can fairly say that we have listened to concerns and tried to improve on what was in the original Bill.

Lord Phillips of Sudbury: Before the Minister sits down, and to prevent me dividing the House, will he answer my point about the complete irrelevance of notions of social and economic circumstances with regard to, for example, a religious or archaeological charity, or, as I mentioned, a sporting charity? What is the relevance of "social and economic"?

Lord Bassam of Brighton: "Social and economic" is a term that can be used to provide context and to reflect the fact that things change over time. Those things are important for us and for public administrations to reflect on from time to time. Surely the noble Lord would agree with that?

Lord Phillips of Sudbury: The noble Lord does not, but he is not so brutal as to divide the House at this late hour. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clauses 18 and 19 agreed to.

Baroness Crawley: I beg to move that the House do now resume.

Moved accordingly, and, on Question, Motion agreed to.
	House resumed.
	House adjourned at eight minutes past ten o'clock.
	Correction The Written Answer to the Question in the name of the Baroness Wilcox in col. WA 2 of yesterday's Hansard attributed to the Chairman of Committees was in fact answered by the Lord Bassam of Brighton.

Tuesday, 28 June 2005.